The European Union

The EU has grown! Belgium, Germany, France, Italy, Luxembourg and the Netherlands agree to form the ECSC The EU consists of 27 Member States. Croatia and Turkey currently hold applicant status. Negotiations with Macedonia have not yet started.

A brief history of the EU 1957European Economic Community (EEC) set up by Treaty of Rome to create a common market with free trade between its six members: Belgium, France, Germany, Italy, Luxembourg and the Netherlands (Holland) 1962Common agricultural Policy (CAP) agreed 1967European Economic Community renamed European Community (EC) 1968Common market completed, with internal tariffs abolished and common external tariff introduced UK, Ireland, Denmark, Greece, Spain and Portugal joined. 1987Start of single market. 1991Maastricht Treaty agreed to set up an economic and monetary union (EMU) with aim of a single currency by European Community renamed European Union (EU) Another 15 countries join the EU

Task: Complete the sentences using some of the words below to fill in the spaces. Denmark 1973 Germany Sweden 1958the Netherlands1995 The European Union was formed in ………………………………… The founder countries were Belgium, France, Italy, Luxembourg, …………………………………………… and …………………………………………………………… The United Kingdom joined the EU in ……………………………………

Task: Complete the sentences using some of the words below to fill in the spaces. Denmark 1973 Germany Sweden 1958the Netherlands1995 The European Union was formed in ………………………………… The founder countries were Belgium, France, Italy, Luxembourg, …………………………………………… and …………………………………………………………… The United Kingdom joined the EU in …………………………………… 1958 GERMANY the NETHERLANDS 1973

What does the EU do? The aim is to merge member states and allow the free movement of goods, services, people and capital (money) between the member states. The EU has introduced a number of policies and measures:

In 1998 half of the £590 billion EU budget was used to support EU farmers by guaranteeing a minimum price for the produce and buying up any produce not sold at this price. However there have been problems with this policy: 1.Overproduction which has led to an excess in supply which resulted in butter mountains, wine lakes etc. 2.High prices – the minimum price was higher than the market price. 3.The huge cost of purchasing the excess. Common Agricultural Policy (CAP)

The Social Chapter The aim of this section of the Maastricht treaty is to standardise working conditions throughout the EU. Basic guaranteed rights include: –A minimum wage –A minimum amount of paid holiday –A maximum working work –Freedom to join a union –Protection of young workers

The Regional Fund This provides funds to reduce unemployment in member states and encourage development. In South Wales the priority is to provide finance to support existing UK help through creating jobs, improving the environment… In Mid Wales there has been a focus on encouraging new jobs outside farming both in small business and in tourism

Effects of EU on Britain Agriculture – CAP meant guaranteed prices. Fisheries – quotas are in place Trade – increase from 33%-55% with EU partners Free Competition – mergers patrolled by European Commission

Effects of EU on Britain Environmental protection – EU generally has higher standards the British laws. VAT harmonization – aiming for same rate across all EU members Social Charter – minimum wages and holidays Single Currency

Task: Complete the sentences using some of the words below to fill in the spaces. 40 Hourslabelling48hoursadvertising equal rights mergersprotect the rights The European Social Charter is a set of rules to ……………………………………………… of employees in the EU. As a result there are ……………………………… for part-time and full-time employees. The maximum working week for most workers is ………………………… The EU competition policy means that all ……………………… of large EU firms must be approved by the EU. The food industry faces tough ………………………… laws which specify which ingredients should be in certain foods.

Task: Complete the sentences using some of the words below to fill in the spaces. 40 Hourslabelling48hoursadvertising equal rights mergersprotect the rights The European Social Charter is a set of rules to ……………………………………………… of employees in the EU. As a result there are ……………………………… for part-time and full-time employees. The maximum working week for most workers is ………………………… The EU competition policy means that all ……………………… of large EU firms must be approved by the EU. The food industry faces tough ………………………… laws which specify which ingredients should be in certain foods. protect the rights equal rights 48 Hours mergers labelling

Came into effect in January 1993 and works on the basis of four freedoms: The free movement of –goods, –persons, –services –and capital throughout the European Union.

What are the opportunities of the Single Market? A wider market Greater competition Consumer protection Common standards on products Mobile Workers Exporting and Importing is easier Easier to set up factories in EU countries

What are the threats to the Single Market? Need to conform to EU standards Some countries are still protectionist Possible cultural differences Disparity between member states Greater competition. Goods coming from countries outside the EU are subject to a common tariff (customs duty).

Single Market and the UK The UK Government believes that the single European market benefits the economy of each member state, and that the removal of trade barriers leads to a reduction in business costs as well as increasing competition and stimulating efficiency, benefiting consumers and encouraging the creation of jobs and wealth.

Single Market and the UK The single market is the world’s largest international free trade area. This has meant that there is a wider market for UK goods - with EU enlargement, UK business has access to over 450 million customers and in 2003, British companies exported approx £105bn worth of goods to the EU15. Since 1990, UK exports to the 10 new member states have grown more than twice as fast as those to the rest of the world and imports three times as fast.

The Single European Currency - The euro 13 countries now use the single currency: –Austria –Belgium –Finland –France –Germany –Greece –Ireland –Italy –Luxembourg –Netherlands –Portugal –Slovenia –Spain The current exchange rate is £1 = €1.47

What do the notes and coins look like?

The European Central Bank The European Central Bank (ECB) is based in Frankfurt. It is responsible for setting interest rates throughout the 13 participating countries. This control of interest rates and monetary policy can have damaging effects on businesses. This is because the interest rates and policy pursued by the ECB will reflect the needs of the member states as a whole If there are inflationary pressures inside the euro zone the ECB may decide to raise interest rates. However there may be countries that do not have inflationary pressure and are trying to avoid recession.. The policies may drive these countries into recession.

The effects of the euro on businesses in the participating states Marketing  All packaging must now display the price in euros.  Pricing – will they round up or down their prices.  Price transparency – it is easier for customers to compare prices across the states.  All promotional materials should display the new price.  Products such as Monopoly, currency converters etc. will need to be updated. Sales All products and in-store advertising will need to display the new price. EPOS (Electric Point Of Sales – tills) will need to be updated or replaced. Staff will need to be trained in the handling of the new currency. Human Resources Training to deal with the new sales and accounting systems. Wages, bonus structures etc now in euros.

The effects of the euro on businesses in the participating states Finance o Accounting system now must be in euros. o Wages, bills etc now in euros. o Now less need to deal with exchange rates. Management Price transparency will lead to greater competition. Costs of exchanging currency will be reduced. Costs of change over (training, new hardware and software will be large. Cross boarder mergers will be easier as the same pricing and accounting system will allow co-ordination. A reduction in uncertainty means that business will have greater confidence in trading between states.

The effects of the euro on businesses in the participating states (cont.) Finance Accounting system now must be in euros. Wages, bills etc now in euros. Now less need to deal with exchange rates. Management Price transparency will lead to greater competition. Costs of exchanging currency will be reduced. Costs of change over (training, new hardware and software will be large. Cross boarder mergers will be easier as the same pricing and accounting system will allow co-ordination. A reduction in uncertainty means that business will have greater confidence in trading between states.

Should The UK Adopt The Euro? YES! It would prevent ‘rip-off Britain’ UK government wouldn’t have to worry about interest rates Since most of our trade is with the EU it makes sense to have the same currency NO! We should be able to control our own economy Our economy isn’t the same as other countries It will cause confusion, particularly with shoppers

1.What does EU stand for? 2.What is the Euro? 3.How many countries are in the EU? 4.What does CAP stand for? 5.What does the Single Market guarantee? 6.How many countries have signed up for the EMU? 7.What is the European Social Charter? 8.What is a Referendum? 9.What is a Treaty? 10.What is Invisible Trade? Questions on the EU

1.European Union 2.The single European currency Common Agricultural Policy 5.Free movement of goods, services, persons and capital in the EU A set of rules protecting the rights of employees in the EU 8.A public vote 9.A contract between states 10.The trade in services Answers