How has the continued weakness in the Euro zone affected the UK Economy?

By the U4 Economic and Enterprise Society

Imports and Exports

The fact that most European counties aren’t buying the UKs goods, shows that European economic trouble is affecting the UK as we are not getting as much money in from goods as we should be. This can lead to unemployment in some sectors and losses of great sums of money.

The Euro zone is the UK's biggest trading partner. Official statistics show that nearly 47% of UK exports went to the Euro zone in 2011, while nearly 43% of UK imports came from the Euro zone. A long-term spiral of decline in the economies of Europe would mean less demand for UK good and services, and that could mean unemployment, especially in manufacturing. Governments have been pushing to grow industries faster, but Euro zone uncertainty leads to a lack of confidence among businesses.

This means we have to look out of Europe to sell our goods, which costs a lot more because of the longer journey and is bad for the environment. Over the past 4 years UK exports to countries outside of Europe have grown at a faster rate than countries in the Euro Zone. For example lots of goods are shipped to Australia, China, India and Russia instead of European countries.

Movement of Labour

Unemployment in the Euro area is falling but remains high compared to the UK, particularly in countries like Greece and Spain. The UK allows people from the Euro area to come to the UK and find jobs without any restrictions such as work permits. Higher unemployment in Europe has meant that many people have come to the UK looking for work. This may mean that it is harder for British people to find work.

British people travelling abroad:

In the second quarter of 2013, GDP in the Eurozone grew by 0.3%. This slow growth is affecting the British public who wish to travel abroad. British citizens who travel abroad get more euros to the pound due to the faster growth in GDP in Britain.

Tourism in Greece: An important aspect of Greece’s economy is tourism, supposedly tourism accounts for 17% of the country's GDP and gives employment to a similar percentage of people.

However, political unrest means that tourism is decreasing and that Greece will find it difficult to maintain these numbers. Greece is attracting new groups of tourists, although European countries have fallen, those from the Balkans and Russia have risen.

What can the government do about it?

The government is trying to create relationships with countries outside of the EU. For example, David Cameron has recently visited China to promote trade with them. We have seen Britain’s trade with China increase 22% over the past three years. In addition to this the government should decrease tariffs to make trading with Britain more attractive.

The UK can work closely with politicians in the European governments to help reduce the level of European debt and restore confidence for investors in struggling Eurozone economies.

Also on top of this the government can focus on improving the attractiveness and quality of UK goods. By investigating in education and training and technology.

Max Bacon, Chris Carpenter, Tom Evans, Charlie Milne, Will Noble, Scott Norman, Sam Robins, Asher Smith-Robson, Williams