The impact of policies of the UE on the UK businesses

The impact of policies of the UE on the UK businesses

There exist many economic systems with different ideologies: socialism and capitalism are good examples. While capitalism endorses free market allocation and government has limited or no control over the market and allows private property, socialism prohibits private property and only the State owns properties. In both cases, governments can take monetary policies to impact money supply, interest rates, cash or inflation as well as fiscal policies to increase revenues and expenditures.

Also, there are different kinds of markets: perfect competition, monopolistic competition, oligopoly… In perfect competition there are large numbers of suppliers and consumers and the price of goods is the average market’s standard price. However, in monopoly, the market is dominated by only one supplier who has the power to establish the price. Since most markets are perfect competition, price is determined by the price that was previously negotiated by the interaction of forces in the market: the offer and the supply. Quality is what determines the success of the product. The supplier needs to sell the most quality and cost efficient product in the market. However, sometimes other aspects need to be taken into account. For example, when Mcdonalds entered in India’s market had to deal with the prohibition of beef in the country as religión prohibites beef and pork meat.

In the EU, governments use competition policies aimed to keep the market fair and opened. There are many examples of companies that have been affected by such policies. Some supermarket chains, and Walmart is an example, are so powerful that can create a monopolistic situation by cooperating between them. The EU does not allow those practices if they affect to competition.

International trade is essential for companies to succeed. Imports satisfy the demand of raw materials and allows the development of the markets. Companies of the UK that go international are able to reach a much bigger market tan if they stay in the domestic economy. But surviving in a global economy rests on the ability to change and to adapt to changes. In the world we live in today, there are not businesses that are not interdependant. The crisis of 2008 showed that reality. And in an interdependant economy, single market is essential. The EU is a unique single market in the world and products can move freely across the state members. UK businesses have increased their benefits thanks to the UK membership in the EU. Businesses can enjoy profits and operate freely without government interventions and so provide the best products to consumers at the best prices. However, the competition policies can also be a problem when they restrict larger businesses, as these policies limit their expanssion. Also, competition policies prevent states from freely interfere in their domestic economies.

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