‘Further expansion of the EU represents a great opportunity for large UK companies wishing to become global players’ discuss.

The European Union is a trading bloc in which attempts to foster economic unification between its members. The EU allows for any member countries and their citizens to move freely amongst the member states, work in any country within the EU and claim welfare from within these countries. Businesses have the benefit of being able to trade with countries within the EU that uses the same currency, therefore reducing the transaction fees of exchanging currencies. Although the UK uses the British Pound, exchanging the Pound to the Euro is still beneficial as all remaining countries in the EU are able to trade using the same currency. Also, there are no exchange rate fluctuations within the EU as the EU sets a standardised rate for all member countries. This means that UK businesses will not suffer from fluctuations in demands and problems accessing loans and credit due to an uncertainty of exchange rates. Free trade also allows for increased competition within the EU allowing businesses to make use of Brand Loyalty and repeat purchases from customers who value the businesses product. However, increased competition for example from Italian firms against UK firms, may cause a decrease in demand and sales as consumers now have more choice within the EU which may lead to price wars. Price wars will cause firms to compete for consumers by lowering their prices to beat other firms in the industry. UK businesses may then experience a decrease in revenue and therefore profit. If the EU expands, there will be more competition and a less concentrated market for industries which can be negative towards UK business sales. Also, as the EU has high regulations and powerful unions, employing staff for UK businesses may be difficult and could increase wage costs as UK businesses are forced to comply with EU enforced minimum wages and working condition standards. While the EU does have benefits for the UK businesses, the EU costs the UK more than what it gets in return and UK businesses may suffer with the dramatic increase of competition.