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EU membership influences the UK economy in a number of ways. The most important effects arise through the Single Market, the programme of economic integration through which the EU’s ‘four freedoms’ are guaranteed.
But the economic impact of the EU is felt in other areas of its policy, too. The EU has exclusive competence to negotiate trade and investment agreements with countries outside the Union; and it is a customs union with a common external tariff on imported goods. Membership thus profoundly affects the UK’s trade relations with non-EU members.
There are also fiscal consequences to membership as a result of the UK’s contributions to the EU budget. Consumer prices are affected through the Common Agricultural Policy and common external tariffs levied on imports. And the fact of EU membership may also influence decisions made by foreigners about whether to invest in the UK.
This note examines the various channels through which membership of the EU affects the UK economy. A general sense of the EU’s economic impact can be gained by reading Section 1 alone. Subsequent sections deal with particular issues, such as the EU’s effect on UK trade relations, in more detail, and compare the UK’s situation with alternative arrangements.