Unless you’ve been living under a rock, you’ll know that Britain’s place in the EU is something which has been dividing the country of late. The Conservatives, after getting in with a majority in the recent general election, have promised a referendum on our membership of the EU before the end of 2017. This means that it will be put to public vote as to whether we should stay in as a part of the EU (European Union).
Everyone who is eligible to vote in the UK will get a choice of Yes (stay in the Union) or No (leave the Union), and the decision will be made that way. This is similar to what happened during the Scottish referendum in September 2014, where the people of Scotland were able to vote on whether they would be an independent country or not.
So now that you have a say in such an important matter, it’s important to understand how each option will affect you, and specifically your finances. Many things will need to change if we exit from the EU, and this could affect both personal and public finances, especially while the UK gets back on its feet as a more independent country. Let’s start with the basics first.
What is the EU?
The European Union is a like an exclusive ‘club’, where countries can join up and work together for a collective good. If a country joins up, then it must agree to follow the rules and to pay ‘membership fees’ in the form of additional taxes. In return, this country then has a say in how things are run within the European continent and, to a degree, within the other countries in the Union. Trading between countries and business transactions are easier within the EU, but they come with certain rules and costs. The EU is growing all the time as countries within Europe join up to take advantage of the benefits that being in the EU can bring, but what works for some may not work for all in the same way, which is why the UK’s inclusion into it is under question. Would we be better off in the ‘club’ or out of it?
What Does the EU do for the UK?
The EU brings the UK closer to our neighbours on the continent and makes it easier for us to trade with these countries. It means that we don’t need to pay for permits or additional taxes that ‘outside’ countries would have to meet in order to have the same privileges. The 5 top aims of the EU are:
The citizenship rights of those who are within the EU affect you directly and give you certain privileges, especially when you’re abroad. These rights give you the opportunity to move between countries of the EU easily and allow you to live in any nation in the Union. They also give you the right to vote and stand in local government and European Parliament elections in your home country should you want to do this. When you’re in a country which is not part of the EU, you can access any EU member embassy if you’re in need of assistance (if the UK was not part of the EU, and there were no British embassies in the particular country you’re in, then you would not be able to use other embassies for assistance). In cases where you think the EU has not acted fairly, you have the right to put in a complaint with the European Ombudsman and you also have the right to petition the European Parliament and appeal to the European Court of Justice should you have need to.
How Leaving Will Affect Finances
Leaving the EU is likely to affect your finances in a number of ways, but financial impacts to the individual are not fully known. A lot of uncertainty lies in what will happen if we leave the EU – some are predicting a blip in the economy as the financial markets get used to the new scheme of things, which could trigger another recession. This – as we know – is likely to hit the average taxpayer hard, so it will be interesting to see how the government plans to cope with this. In the longer term, there is potential for the UK’s economy to improve, and therefore your finances to improve along with it, but this is dependent on how the UK manages itself once it’s no longer in the Union.
It may be more expensive for businesses to trade with other countries, which in turn could push up prices or even mean that it’s not as easy for us to get imports from other EU countries, like Italian wines, Champagne and Spanish meats, for example. Businesses from other EU countries which have headquarters and branches within the UK may have to downsize or leave due to certain business freedoms being taken away. This looks likely to affect many jobs. New taxes could be applied to airlines, which means it could be more expensive to travel to other European countries than it is currently.
The Next Steps
So, what’s next? No matter whether you think we should stay in the European Union or not, it’s important to widen your understanding of the impact each decision will have in both the short and long term. Rather than concentrating on one issue, look at the bigger picture and think to the future. What do you really think is best for you, the future generations, and for the UK as a whole? They’re big questions, so read up all you can before casting that all important vote when the time comes. All we know at the moment is that the referendum will take place at some point before the end of 2017, although this may change in the coming months as the ball gets rolling in Westminster.
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