Describe one likely impact on the UK leaving the Single Market (6 marks).

A single market is a level of economic integration where a group of countries eliminate all tariffs, quotas, and non-tariff barriers for members, and allow free movement of labour and capital. The EU is an example of this and leaving it could impact the UK economy in multiple ways. A likely impact would be higher import tariffs on EU exports, as the UK would now be outside the single market and therefore forced to pay tariffs to trade with the EU. Higher import prices would increase costs for UK firms who would then experience lower profits. The firms would likely be forced to raise prices, lowering consumer surplus, causing consumer welfare to suffer. Of course, this analysis assumes that the UK is unable to negotiate a free trade deal with the EU before leaving the Single Market. Moreover, this is also likely to be only a short term impact as the UK could find other, cheaper, trading partners in the long run.