Q&A - Does globalisation benefit UK businesses and the UK economy?

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There is an argument about whether the seemingly unstoppable process of globalisation provides an overall benefit to the UK.

The arguments in favour of the contribution of globalisation include:

• Opportunities for UK businesses to trade and invest overseas
• Access to cheaper goods and services from emerging market countries – leading to higher real incomes
• Opportunities to live, study and travel overseas
• Bigger export markets – chance to exploit economies of scale
• More intense competition – drives innovation and economic efficiency
• Globalisation has lifted hundreds of millions of people out of absolute poverty around the world
• The emergence of an extra one billion ‘middle class’ consumers worldwide is a huge export opportunity for the UK
• Falling cost and rising speed of global communications and transport has helped to bring people closer together

The counter argument makes points such as:

• Risks of increase in structural unemployment in industries / regions that lose demand to lower-cost competition from overseas
• Globalisation may lead to rising income and wealth inequality
• Increase in global trade / output has an environment effect – increased use of non-renewable resources and CO2 emissions
• Globalisation of brands – perhaps a loss of cultural diversity
• UK government has less control - economy may become more vulnerable to external shocks
• Surge in inward migration of labour has brought economic and social tensions
• Globalisation contributed to the sharp fall in interest rates and widening trade imbalances that were part of the root cause of the credit crunch
• High food and fuel price inflation has hurt lower income families most

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