Pros and cons of being in the EU

What are the pros and cons of leaving the European Union and why is this important for traders?

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Benefits of being in the EU: the debate

With speculation playing a part in almost every claim for or against the EU, it’s a big ask to distinguish between legitimate risk and routine doom-mongering. As long as there are as many ‘what ifs’ at play as there are, either camp could ultimately be proved right or wrong.

While clarity may not be easy to come by, understanding the key arguments involved could nonetheless give clues as to how markets may react if one camp gains ground over its rival. Each has created a manifesto on the central issues at hand, and we have laid out their positions in simpler terms below.

Stay

The driving force behind the campaign to stay in the EU is Britain Stronger in Europe. Spearheaded by former M&S CEO Stuart Rose, it includes Caroline Lucas, Peter Mandelson and Danny Alexander, as well as a number of other high-profile figures.

Its arguments tend towards the benefits of being part of a wider union – and the security and favourable treatment that come with it.

 

Leave

With the leave camp proving more fragmented than the opposition (a fact many think could damage its chances of victory), it came down to the Electoral Commission to resolve the question of who would officially lead their campaign.

The campaign group Vote Leave ultimately came out on top. Chaired by Labour MP Gisela Stewart, its committee consists of a variety of members of different parties – including Michael Gove and Douglas Carswell – and boasts the backing of a number of prevalent entrepreneurs.

Their arguments for leaving are straightforward: more sovereignty, less red tape

 

Key advocates for stay

  • David Cameron, Prime Minister
  • George Osborne, Chancellor
  • Theresa May, Home Secretary
  • Jeremy Corbyn, Labour leader
  • Sadiq Khan, Labour candidate for Mayor of London
  • Carolyn McCall, Easyjet CEO
  • Vittorio Colao, Vodafone CEO
  • Stuart Gulliver, HSBC CEO

Key advocates for leave

  • Boris Johnson, Mayor of London
  • Michael Gove, Secretary of State for Justice
  • Nigel Farage, UKIP leader
  • Theresa Villiers, Secretary of State for Northern Ireland
  • Zac Goldsmith, Conservative candidate for Mayor of London
  • John Caudwell, Phones 4u co-founder
  • Tim Martin, Wetherspoons chairman
  • Michael Geoghegan, former HSBC CEO

Key arguments for stay

  • Foreign affairs:

    As part of a 500 million-strong economy, Britain has greater influence over international matters.

  • Sovereignty:

    Britain has proved that it can opt out of EU policies it considers counterintuitive, such as the euro, the Schengen Agreement and enforced migrant quotas.

  • Security:

    A union better equips Britain to tackle threats to security, including terrorism and cross-border crime.

  • Money:

    Europe provides Britain with billions of pounds’ worth of investment each year.

  • Trade:

    Membership in the EU gives us the strength to negotiate favourable trade agreements with countries around the world.

  • Business:

    Free trade within the EU reduces barriers and enables UK companies – particularly small ones – to grow.

  • Jobs:

    Millions of jobs linked to Britain’s membership would be put at risk.

  • Consumer goods:

    The average person in Britain saves hundreds each year thanks to lower prices of goods and services facilitated by the EU.

Key arguments for leave

  • Foreign affairs:

    EU membership limits Britain’s international influence, ruling out an independent seat at the World Trade Organisation.

  • Sovereignty:

    Britain would have more control of its laws and regulations, without risk of having counterintuitive policies forcefully imposed.

  • Security:

    Britain’s domestic security would benefit more from greater border control than political union.

  • Money:

    Britain contributes billions of pounds in membership fees to the EU every year.

  • Trade:

    Membership in the EU keeps Britain from fully capitalising on trade with major worldwide economies like Japan, India and the UAE.

  • Business:

    The EU subjects Britain to slow and inflexible bureaucracy, making it more prohibitive for smaller, more innovative companies.

  • Jobs:

    Improved global trade agreements and more selective immigration would have a positive effect on the British job market.

  • Consumer goods:

    The average person in Britain lose hundreds each year owing to policies regarding VAT contributions and agricultural subsidies.

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