Economics Summer Term Task - PDF Free Download

Economics Summer Term Task 1. Research the impact of the vote to leave the EU on the UK economy a. In the short term (the next year) b. In the long term (the next 5 to 10 years) -use the links on slide 5 2. Essay The Remain campaign was based on economic analysis which exaggerated the benefits of EU membership. Britain will flourish as an independent sovereignty. To what extent do you agree with this statement? (25 marks) Deadline: 12 th September 2016

UK and the European Union: How might Brexit affect the UK?

Knowledge ~ EU single market, enlargement, the euro, trading blocks Understanding ~ The pros and cons of EU membership Skills ~ Investigative historical research and data analysis. Report writing A* A I can evaluate using data and logical economic reasoning the impact of Brexit B Grade I Can investigate and examine how different economists + politicians explain the importance of the EU C I can describe the role of the EU and the importance of the single market

What are the likely / possible impacts of Brexit? Section 1 ~ Intro Knowledge EU, Single market Section 2 ~ Economic arguments Remain Section 3 ~ Economic arguments Leave Section 4 ~ Conclusion. Judgement. Depends on Section 5 ~ Recommendations A* A I can evaluate using data and logical economic reasoning if the UK should remain or leave the EU

http://www.bbc.co.uk/news/business/economy http://www.bbc.co.uk/news/business-36470809 http://www.migrationwatchuk.org/ http://www.ukip.org/ http://ec.europa.eu/index_en.htm https://www.theguardian.com/business/2016/ju n/01/brexit-could-spread-shockwaves-troughglobal-economy-says-oecd http://www.telegraph.co.uk/news/newstopics/e ureferendum/12195932/eu-facts-did-the-obrreally-warn-against-brexit.html

EU Quiz 1. 1. Place the USA, China and the EU in US$ GDP rank order, i.e. Which is No 1... 2... 3...? 2. What s the population of the EU? Is it? a) 301 b) 401 c) 501 millions 3. What % of the E.U. s GDP is taken by the costs of running Brussels, i.e. the parliament, the civil servants and spending such as farming subsidies?

EU Quiz 1. 1. Place the USA, China and the EU in US$ GDP rank order, i.e. Which is No 1... 2... 3...? 1. The E.U. 2. USA 3. China 2. What s the population of the EU? Is it? a) 301 b) 401 c) 501 millions 2. It s 501 millions 3. What % of the E.U. s GDP is taken by the costs of running Brussels, i.e. the parliament, the civil servants and spending such as farming subsidies? 3. The answer is 1%

A brief history of the EU Starts in 1957 with 6 countries: the common market ; Britain refuses to take part After seeing Europe grow faster, Britain joins in 1973, with 2 others, to make an E.C. of 9 countries 1975, a UK referendum approves UK membership 1993, the Single Market arrives, and the name is changed to the European Union (EU) 1995 more members join to make 15 1999 the Euro (single currency) arrives 2004 & 07 and 14 : East European members push EU to 28 countries the world s biggest economy

The EU and trading blocs. The EU is one among many trading blocs The US is part of NAFTA (with Mexico & Canada) In Asia, there s ASEAN; In East Africa they ve just expanded the East African Community; Russia has re-formed its trading bloc; and China, Japan and Korea have started talks about their own... i.e. they re popular and growing worldwide About 65% of the world s GDP is generated by countries within trading blocs

The EU and trading blocs (2). But the EU is unusual in having gone from free trade to free movement of labour..... And it has more robust legal institutions, i.e. E.U. Law is strong and powerful (largely designed to counterbalance the power of corporations with more power to ordinary workers and consumers)...and few other trading blocs have a common currency (the Euro, which has 17 members) Absolute latest idea: the USA has mooted an agreed free trade area: NAFTA + EU

Theory of Gains from Trade If countries specialise in making what they are most efficient at, the total pie is larger and all countries can have higher living standards For this to be true depends somewhat on the terms of trade (exchange rates) and what types of goods you have an advantage in However, studies have clearly shown that closed economies, countries like North Korea who trade very little are the slowest to grow their GDP An open economy should gain jobs from firms exporting and consumers should benefit from lower prices and more variety of goods (think bananas and iphones)

Challenges to Free Trade Theory There are winners and losers UK car industry has boomed through globalisation (Toyota, Honda, Nissan all make cars here) BUT Steel plants closing due to cheap imports from China It isn t a level playing field. There are lots of tariffs, quotas and subsidies that mean it is not fair. The EU charges a 10% tariff on all car imports from outside the EU (you don t see many American cars in Europe) The EU subsidises agriculture extensively making it hard for African countries to compete and benefit from their cheap labour costs

UK Exports by Geography s mill 40000 35000 30000 25000 20000 15000 10000 5000 Britain joins the E.C. 1973 UK exports by value 1970-1987 Source: The Economist To European Community To Rest of Europe To N America To ROW 0 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

60 UK exports by Geography (%) % % of UK exports to Europe v Other 50 40 30 20 10 Exports to EC Rest of Europe N. America ROW 0 1965 1970 1975 1980 1985 1987

UK exports to Germany go from under half the US level to beating the US Bn DM 50 45 40 35 30 25 20 15 10 5 0 German imports from 4 major countries, source: The Economist Britain joins EEC in 1973 Britain 1975-1985 +435% USA 1975-1985 +127% 1960 1965 1970 1975 1980 1985 1987 France 1975-1985 +122% Italy 1975-1985 +116% France Italy UK USA

British exports ( ms and % of total) Exports from Britain to other Continents 2010 (Source: IMF Direction of Trade statistics) Africa 4% 4% Oceania 3% 1% Asia Americas 17% 17% 26% 18% 2010 Services 2010 Goods Europe 50% 60% 0 20000 40000 60000 80000 100000 120000 140000 160000 ms

Recent UK export trends $ms 360,000 320,000 280,000 240,000 200,000 160,000 120,000 80,000 40,000 0 UK exports (in US $s) 2004-2010 +2.4% +17% +31% -18% +51% 2004 2010 2004 2010 2004 2010 2004 2010 2004 2010 Asia-Pacific South America USA Europe Total

Economic logic behind the EU Free trade within external tariff walls, i.e. no tariffs, no quotas and few legislative barriers.....therefore creating a huge home market, giving UK firms the scale to tackle world markets The EU s scale protects members from the worst effects of trade wars (quite common, say between China and India or China and the US)

UK growth compared to other countries 3.50% 2011 growth in real GDP (actual data Feb 2012) 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00%

2010 exports to high-growth countries China India (09) Russia South America Africa (09) Germany 61,012 11,170 33,613 35,192 18,305 France 14,226 3,339 7,622 13,911 27,860 Italy 11,346 3,832 10,507 14,616 15,251 UK 9,090 4,587 3,785 7,936 10,050 IMF Direction of Trade Statistics; $millions, 2010

Free Movement of Labour Theory Pros Fills skill gaps (e.g. NHS / social care, construction) Creates opportunities for UK citizens abroad Increase supply of labour keeps wages low, increasing productivity and profitability of firms. Firms then expand and create more jobs, pay more taxes and living standards rise Cons Emigration may be higher than immigration leading to declining GDP and skill gaps (current issue in Poland) Increased supply of labour leads to lower wages (in work poverty) and higher domestic unemployment High immigration can lead to pressure on public services, social tensions and hate crime

UK net migration (immigration minus emigration) over time

Immigration by geography 2015 Table 1: Latest Migration Statistics, Year Ending December 2015 All Citizenships British Non-British EU Non-EU Immigration 630,000 83,000 547,000 270,000 277,000 Emigration 297,000 123,000 174,000 85,000 89,000 Net Migration 333,000-39,000 373,000 184,000 188,000