The EU is an amalgamation of 27 countries in Europe that came together for economic and political purposes. One of the EU members is the UK, which has several businesses that operates across the EU. On the economic front, there is provision for a large market base for businesses in the region and they even experience less trade restrictions and tariff levy.
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The wide outlets make businesses within the EU to register high profits with a low cost of production thus maintaining a strong financial base. However, an attempt by the UK to withdraw its membership from the union has negative financial effects to the UK and businesses within the UK.
An example of a business within the UK is the Carr’s Milling Industries Plc. This firm falls under the agricultural sector. It has three major divisions namely food, engineering and agriculture. On agriculture, it supplies farm products such as livestock feeds, farm lubricants, and oil under the Carrs Billington Agriculture. Notably, it commands a large market in all the 27 EU states. The firm was formed in 2005 after AF feeds, Carrs Agriculture Ltd and Billington Agriculture Ltd merged.
It has a network of 23 retail branches and, currently, performs quite well at the London Stock Exchange with a share price of £1,150 and a positive rise of £40 that represents +3.60%. In addition, at the end of the 2012 fiscal year in august, the firm registered sales of $639.3M, a net income of $13.5M and a one year growth of 4.7%. I picked this firm since agricultural products are the major human consumption; therefore, an analysis into the operation of this firm will reveal its impact in the global consumption market.
Evidently, the finished products of Carrs Billington Agriculture have their consumers in the entire EU. As a result, UK’s withdrawal from the EU will reduce the market size for this agricultural firm, which earlier was enjoying free tariffs between the member states. This step will increase the trade barriers and restrictions for the products leaving UK to other EU member countries. Markedly, UK’s 40% of exports go to Europe.
These effects will tremendously reduce the trade volumes and returns in the agricultural sector hence leading to layoffs within Carrs Billington Agriculture. Again, the UK will not have any say on the single market laws but will continue contributing funds according the Common Agriculture Policy requirements. Sadly, no farmer from UK will receive the cash. Moreover, attempts by UK to impose tariffs that are at odds with the single market agreement of EU will be rejected out rightly.
In return, UK will experience a decrease in economic growth and, possibly, a negative net income for Carrs Billington Agriculture. These sanctions or restrictions will reduce the Gross Domestic Product (GDP) of UK. This will translate to increased prices for the essential products and with little money circulation among the people, there will be a decrease in the people’s living standards.
Additionally, leaving the EU will weaken the UK’s currency. The uncertainties that come with withdrawal from a regional body may put off investors from moving into the UK. The investors will also move out with their wealth of knowledge. In essence, the international relationship between UK and other European nations will greatly be affected; for instance, the Italian cheese and French wines will attract high taxation making people to shy away from consuming them.