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

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