Supporting comments:
The opportunity cost will be reduced due to the losses in investment and trade in the euro countries, For the first time SMEs will be able to act freely in the market. Such a situation will give impetus to SME sectors leading to their growth and development.
Increase in Stability would be witnessed due to decrease in vulnerability to short term shocks (such as housing prices and rising interest rates) that will affect the foreign exchange rates, which will in turn affect the level of exports.
UK may find itself getting side tracked in terms of political decisions within the EU, if not a full member in economic terms.
Business costs would be reduced as the effort of converting pounds to Euros’ will be eliminated and associated fluctuations in currency rates that could reduce an unexpected surplus.
UK companies will be able to take long term decisions as the unexpected exchange rate movements will drastically reduce.
As the competition in all local markets increases it also rises the the benefits that consumers enjoy due to varied options and price transparency, which can no longer be hidden with currency rate fluctuations.
Disadvantages :
Majority of the population in the UK do not support the decision of joining the euro zone which may culminate in no confidence in the economy and many also believe that UK might lose control over its own economy.
The bank rates will be decided by the Central Bank for all euro zone countries and UK would not be able to set its own rates. This will reduces the ability of the government to react to shocks. The fluctuation in interest rates will benefit all the countries of the euro zone , which means that it benefits some countries more than other euro zone countries.
Mortgages in the UK are different from the rest of Europe. In Britain, there is a high proportion of owner-occupiers with variable rate mortgages. In the rest of Europe, however, there is a greater tendency towards long-term lease, and those with long-term mortgages are fixed rates. Therefore, homeowners in the UK are more likely to be affected by changes in interest rates than their counterparts in other EU countries.
The Euro zone member countries are required to follow the guidelines by the Stability and Growth Pact, the member countries should not use credit beyond its income. If Britain wants to borrow money for long-term investments it would be contrary to the guidelines, hence limiting the amount of long term loans that UK can take for growth and development.
Impact of joining the euro zone on the business in UK
Advantages in business planning: - Joining the euro zone would reduce the foreign exchange rate fluctuation which would benefit the companies in their long term investments.
The cost of credit – for quite some time now the rate of interest in Britain is higher than the continental rates of interest. Competitors of the euro zone enjoy benefits of the low prices by availing for loans which helps them improve their technology.
Cross-border transactions: cross border transaction of business, services, and material becomes easier and faster due to the mineralisation of the restriction to business over the borders.
Price transparency: - With the euro, it will be possible to compare prices for identical products or services between the different member countries of the euro zone. This will enable the end user to decide on the product easily as it will give full transparency of price also confirming to better quality due to the open competition , the companies in turn will also have to compete by giving better services to remain in the market thus inducing a continuous process of research and development enabling the consumer to get the best product of latest technology.
Scope of the pan-Euro-sourcing, marketing, labelling and packaging: - By joining the euro zone it makes business easier and much beneficial by opening new option of more suppliers from outside the local market. This opens the possibility of a real business savings. Through the creation of a common unit of account for commercial activities, ensures that businesses are facing a larger, more integrated European market.
Find out more from UK Essays here: http://www.ukessays.com/essays/economics/impacts-of-the-eu-on-uk-business-economics-essay.php#ixzz3K0l0YqtL
Supporting comments:
The opportunity cost will be reduced due to the losses in investment and trade in the euro countries, For the first time SMEs will be able to act freely in the market. Such a situation will give impetus to SME sectors leading to their growth and development.
Increase in Stability would be witnessed due to decrease in vulnerability to short term shocks (such as housing prices and rising interest rates) that will affect the foreign exchange rates, which will in turn affect the level of exports.
UK may find itself getting side tracked in terms of political decisions within the EU, if not a full member in economic terms.
Business costs would be reduced as the effort of converting pounds to Euros’ will be eliminated and associated fluctuations in currency rates that could reduce an unexpected surplus.
UK companies will be able to take long term decisions as the unexpected exchange rate movements will drastically reduce.
As the competition in all local markets increases it also rises the the benefits that consumers enjoy due to varied options and price transparency, which can no longer be hidden with currency rate fluctuations.
Disadvantages :
Majority of the population in the UK do not support the decision of joining the euro zone which may culminate in no confidence in the economy and many also believe that UK might lose control over its own economy.
The bank rates will be decided by the Central Bank for all euro zone countries and UK would not be able to set its own rates. This will reduces the ability of the government to react to shocks. The fluctuation in interest rates will benefit all the countries of the euro zone , which means that it benefits some countries more than other euro zone countries.
Mortgages in the UK are different from the rest of Europe. In Britain, there is a high proportion of owner-occupiers with variable rate mortgages. In the rest of Europe, however, there is a greater tendency towards long-term lease, and those with long-term mortgages are fixed rates. Therefore, homeowners in the UK are more likely to be affected by changes in interest rates than their counterparts in other EU countries.
The Euro zone member countries are required to follow the guidelines by the Stability and Growth Pact, the member countries should not use credit beyond its income. If Britain wants to borrow money for long-term investments it would be contrary to the guidelines, hence limiting the amount of long term loans that UK can take for growth and development.
Impact of joining the euro zone on the business in UK
Advantages in business planning: - Joining the euro zone would reduce the foreign exchange rate fluctuation which would benefit the companies in their long term investments.
The cost of credit – for quite some time now the rate of interest in Britain is higher than the continental rates of interest. Competitors of the euro zone enjoy benefits of the low prices by availing for loans which helps them improve their technology.
Cross-border transactions: cross border transaction of business, services, and material becomes easier and faster due to the mineralisation of the restriction to business over the borders.
Price transparency: - With the euro, it will be possible to compare prices for identical products or services between the different member countries of the euro zone. This will enable the end user to decide on the product easily as it will give full transparency of price also confirming to better quality due to the open competition , the companies in turn will also have to compete by giving better services to remain in the market thus inducing a continuous process of research and development enabling the consumer to get the best product of latest technology.
Scope of the pan-Euro-sourcing, marketing, labelling and packaging: - By joining the euro zone it makes business easier and much beneficial by opening new option of more suppliers from outside the local market. This opens the possibility of a real business savings. Through the creation of a common unit of account for commercial activities, ensures that businesses are facing a larger, more integrated European market.
Find out more from UK Essays here: http://www.ukessays.com/essays/economics/impacts-of-the-eu-on-uk-business-economics-essay.php#ixzz3K0l0YqtL
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