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I've been told the UK would be worse off but how exactly would it be? Would a country that left the EU:
Lose anything more than just funding they receive from the EU?
Not just copy the EU's policies that it likes, and get rid of the ones it doesn't?
If #2 is true, would countries not be better off without the EU, because they can control their own countries more?
Payments to the European Union or funding from the EU budget are really small potatoes, especially for the UK. For a handful of very small countries (Estonia, etc.) the amounts received are somewhat larger relative to the size of their economy but the overall budget only corresponds to a little over 1% of the EU gross national income (by contrast the UK budget is roughly 40% of UK GDP).
Besides, the UK is a net contributor so it would stand to gain, not lose money by leaving the EU. And it is also protected by its rebate so that the amounts in question are markedly smaller than for other net contributors like Germany, France or Italy (biggest contributors by far) or Denmark (smaller country so smaller contributor in absolute terms but largest contributor per capita or as a percentage of national GDP).
Of course, you can easily find funny stories of wasteful spending or throw around BIG NUMBERS but that does not mean much and it's pretty much unavoidable with anything the size of the EU (or, in fact, a country like the UK or even a large corporation).
There are some subtle reasons why you could argue that channeling money through EU programmes is still a good idea even for net contributors or conversely worry that these funds are more likely to be misused by the EU than if they were directly managed in the UK but the amount of money in question means that it's difficult to consider it a deal breaker one way or the other.
With that out of the way, we have to ask ourselves what it is the EU really does and how/whether it matters? And, in spite of all efforts to branch out to other things (from the Common Agricultural Policy to failed initiatives like the European Defence Community and fledgling efforts like the Common Foreign and Security Policy or the former Police and Judicial Co-operation in Criminal Matters – the UK does not fully participate in the latter), the answer is still that the EU is first and foremost a common market.
That's the source of most of the rules enacted at the EU level, very much including the freedom of movement for persons (i.e. the right for EU citizens to work anywhere in the EU), and down to seemingly silly things like the rules on the shape of cucumbers and what not. Unfettered access to the internal market is what the UK stands to lose if it stops implementing all these rules.
Now, could you not just copy the same rules and enact them independently? Why, yes, you could, and in fact that's pretty much what Norway does. But it cannot really pick and choose between them if it wants to retain access to the internal market. Norway went this way for internal political reasons and could thus stay out of some EU policies but overall it has less, not more, control over EU rules and their impact on the country because it still effectively implements them, participates in many key policies and contributes generously to their budget but has no vote and no seat in the institutions. The whole arrangement has been called “fax democracy”.
As for Switzerland, it's not part of the EEA as implied by another answer and it tried very hard to negotiate some sort of tailor-made association with the EU. How well that works in the long-term remains to be seen. These agreements are barely a decade old (first package implemented in 2002, second package between 2005 and 2008) and their future is already uncertain after the 2014 referendum whose consequences are still up in the air. All this is happening as a key part of the framework (the so-called “institutional aspects”) was still under negotiation.
What many commentators fail to realise is that these bilateral agreements are already a good deal for Switzerland and that the EU has always been very keen on working with Switzerland and quite accommodating. I might be wrong but I very much doubt it would be possible to get even more flexibility or that other member states would entertain going down the same road for a much larger country like the UK (especially if it sets an unpleasant precedent by being the first one to leave rather than negotiate from the outside like Switzerland).
Of course, trade would not stop, especially when one considers that tariffs have also generally decreased since the creation of the EEC so the EU internal market is more open than ever to the rest of the world. But it would certainly make the UK somewhat less attractive for foreign direct investment, add a lot of bureaucracy for things like hiring people, and importing or exporting goods from the EU and potentially complicate life for many British citizens who spend their holidays or reside elsewhere in Europe.
There is no easy fix for that as it is is really in the nature of the internal market: Goods can circulate easily because all EU countries trust each other to implement the same standards in most areas, have a similar system for VAT, etc. Even if you try to create another institutional arrangement like Norway, you can't regain full control over these rules without threatening the whole architecture of the internal market.
I don't know how much a split with the EU would cost and it's perfectly reasonable to argue that it would be worth it to regain more control and strengthen democracy but it's important to realize that access to the internal market is what's it's really about.
freedom of movement - UK is part of EU, but is not participating in Schengen Agreement. Norway and Iceland are not in the EU, but are participating in Schengen Agreement. Romania, Bulgaria and Croatia are in the EU, but their citizens can not move freely.
not just copy the EU's policies that it likes, and get rid of the ones it doesn't?
The European Union policies that the United Kingdom (for example) likes are the ones that require other EU countries to accept their goods without tariffs or other customs barriers.
The ones that the UK doesn't like are the ones that require them to do things. In particular, they were required to accept immigration from anywhere in the EU.
See the problem? The laws that are under the UK's control are the ones that they don't like in the EU version. The ones they like are under the control of other countries. That's why the EU is built much like a treaty. It trades obligation for obligation.
The UK is an example here. Other countries might have different laws that they like and dislike. But the basic idea is the same. Countries accept the EU requirements that they don't like in exchange for requirements on other countries that they do like.
The pro-EU claim is that the improvement in the economy due to common regulation and freedom of movement of goods and people outweighs any losses due to the requirements upon them. But this is a tradeoff. It's not something where a leaving country can just keep the good parts. Leaving the EU means that their exports are more restricted, that their citizens have a harder time emigrating, and that they have less influence on regulations. Absent a replacement deal, that's not something that they can fix. And of course any replacement deal would involve them accepting things they don't want in exchange for the things they do want.
As a Swiss citizen, who once was pro-European-Union, I have the following things to say:
It depends
Let's first clarify a few fundamental things.
First, there was the European Union (EU)
Then, for those candidate countries that would kind-of have a limited membership/reservations (Iceland, Liechtenstein, Norway, Switzerland), the European Economic Area (EEA) was created
This European Economic Area is a Free-Trade area between the European Union and the European Free-Trade-Area (EFTA)
And a few points about Switzerland first, since it came up in other answers:
Naturally, the political establishment in Switzerland wanted to join the EEA, because it wanted access to the EFTA. However, Switzerland is a direct democracy, and joining a Free-Trade-Area requires a change in the code of law, which requires the new law to get a majority vote (in a referendum).
So the government/political-establishment cannot just decide that, like it could in pretty any other country; they need to get a majority vote. But in reality not the entire political establishment was for joining (evil tongues claim this is because the EEA contained minimum-wage-rules, which at the time, and to this date, do not formally exist in Switzerland ). So on the base that a EEA-membership would allow Germany/French/Italians to work in Switzerland in "unlimited quantities" (remember, the Berlin wall fell 3 years earlier, and saw a migration of a big lot of poor East-Germans (GDR-citizens) westward), fear about unemployment and salary-dumping was generated, and successful because Switzerland was in a pretty bad recession at the time. As a consequence, the voting (not an election, but a vote about the law-to-be) was hold on the 6th of December 1992, and it saw a 50.3 % NO-majority (by the way, it also failed in the Swiss equivalent of a upper-chamber/senate, with 16 out of 23 being no-votes).
Naturally, the outcome of the vote was not in the interest of the government, so in 1995, they tried a backdoor-entry via the initiative "for an immediate membership in the EU". It demanded immediate start for membership-negotiations (and thereby EFTA-membership). This initiative was voted-on on the 4th of March 2001, and it saw a 76.8% NO vote.
However, long before that 2001-vote, the government had to concede that they could not get a vote about EFTA membership through the voting process as long as freedom of movement and residence (and thereby work) was contained in it (aka Schengen-agreement).
But the prospect of being a EU-external-frontier (trade tariffs, delays, trade obstructions/barriers) was not very desirable for the industry in Switzerland. So the government started negotiating bilateral agreements between the EU (includes negotiations with all the EU's member-states) and Switzerland.
However, negotiations were very difficult, and the EU-east-enlargement stood in front of the door. Because after the enlargement, Switzerland would have had to negotiate with that many more countries, they tried to finish the negotiations before the enlargement. It was claimed that they tried their very best to prevent having to sign the Schengen agreement, but that it simply could not be done, and that it's better to take the winnings of those negotiations instead of renegotiate with about 10 more countries. Then there was a referendum at the 21st of Mai 2000, in which the referendum against these contracts was taken, and lost, So the contracts became effective as of June 1st 2002. In 2005, Schengen was accepted (the sheep majority of 55% was afraid of what would happen to the industry, and therefore their jobs, if they didn't). So, de facto, these bilateral-contracts are quite the same as EEA-membership, with perhaps a few better terms (like no minimum wage, or automatic adoption of EU law, instead it is semi-automatic). The Schengen-agreement came into effect on the 12th December 2008.
Then in 2009, the sheep voted to extend the free movement of people (=freedom to work in Switzerland) to Bulgaria and Romania by a 59.6% majority in favor, because their government promised "flanking arrangements" in case too many people come and create an unemployment or dumping problem. In practice, these promises turned out to be nothing more than hot air.
Since then, the economic situation has become progressively worse, particularly because of salary dumping and rising unemployment. Correspondingly, social security has been reduced/cut, while corporate taxes were lowered. In February 2014, a initiative was brought to a vote, which demanded to create law limiting the freedom of movement of foreign citizens to Switzerland. It passed, but the consequences would entail the renunciation of the Schengen-agreement, and, absent agreement otherwise, the triggering of the Guillotine clause collapsing the other six bilateral agreements (=cutting EFTA membership).
So... A) It depends on which country. In terms of contributions, Germany and the UK would be much better of if they left. Most Eastern-European and Southern-European countries on the other hand, would be in a world of trouble.
Would a country that left the EU lose anything more than just funding they receive from the EU?
Yes, they would loose access to the EU R&D funds, and for example, the student-exchange program. They would also loose access to ECB money. Forthermore, you could loose freedom of movement and residence (you couldn't work in Germany or Switzerland or Austria or Luxemburg, for example). Also, you'd loose on the EU agricultural subsidies (last time I heard, they make up 51% of the entire EU's budget, now - talk about madness)
I've been told the UK would be worse off but how exactly would it be?
Because you'd no longer be an EFTA member, you'd be an EU exterior border, subject to tarifs and trade obstructions. If you wanted to export something to all European countries, then first you needed to pass through several othern countries (e.g. via ferry from Dover to Calais, then by lorry through France& Germany to Poland, you'd need to negotiate the passage through France, Germany, before you could begin customs proceedings in Poland. You'd also have to comply with any national legislation, which is different in every EU member country. You'd be a lot slower, plus more expensive plus far less flexible than a German competitor who can just drive through wherever he wants whenever he wants, with however much he wants (OK, granted that's an oversimplification, but you get what I mean).
Could a country that leaves the EU not just copy the EUs policies that it likes and get rid of the ones it doesn't?
Yes it could. But be careful. Knowing all those sanctimonious politicians, that can mean getting rid of the minimum-wage-regulations. It can also mean overruling the European court of human rights, or the EU criminal court. If UK politicians want to get rid of these two institutions overruling national UK sleaze-justice (requiring royal approval & with an unwritten constitution), this is not necessarily a good thing.
If this is the case would countries not be better off without the EU because they get more control over their own countries?
Considering the amount Germany pays into the EU, and what it gets out of it (e.g. from Greece "rescue-credit"-à-fonds-perdu, or from Czechia/Slovakia financing flat-tax and tax-exemptions for corporations via EU money for building industry, which is actually used to suck industry from Germany to Czechia/Slovakia, ironically financed by taxes raised in Germany which reduce investment in Germany and also financed by state cost-cuttings in infrastructure + R&D spending as well as reducing pensions), we could establish with probability bordering on certainty that Germany would be better of if it wasn't a member of the EU, especially considering how much the value of the Euro has been lowered by the ECB to support the monetary bottomless-pits known as Portugal, Italy, Greece and Spain (and France). Remember, if money-printing is the source of inflation, the looser is the one who has no debts and lots of assets.
So would the UK, most probably. It is worth pointing out at this point that the German chancellor Helmut Kohl agreed to the Euro because it was a condition imposed by France on German re-unification (read: the short-term benefits of German reunification for Germany Helmut Kohl & Co.'s personal financial bottom-line and political gain outweight the long-term-disadvantages of the ECU). Also, Germany was against taking Greece into the Euro, but agreed to it because France (or rather France's leaders) wanted it so.
However, if you boot for example Greece out of the EU, that means Russia can get its foot into the Mediterranean (and the Dardanelles), which would strategically be profoundly unwanted. Same thing with certain eastern-European countries. Namely, if China gains a hold in Hungary, its cheap cars can roll via the port in Piraeus into Hungary, and from there into the EFTA, where they can wreak havok big time. Also, the long-term benefits of Poland now being the buffer-zone between Western-Europe and Russia in a potentially hot war probably outweighs most economical considerations.
Furthermore, if you're paymaster, you can dictate terms (or at least you're supposed to).
To quote Publius Quinctilius Varus (an old German proverb)
With Friends Like These, Who Needs Enemies?
Most Eastern-European and Southern-European countries on the other hand, would be in a world of trouble Eastern-European economies were growing faster before joining the EU. The growth is thanks to free market and not the EU, which is shaped like Soviet Union with its central planning and artificial investments. So even Eastern European countries would be better without EU and could recover from damages made by Yalta. Now it's hopeless for them, because "with friends like these, who needs enemies".
Could a country that leaves the EU not just copy the EUs policies that it likes and get rid of the ones it doesn't?
A country could try, but I am sure it won't be successful. Other countries won't share all the advantages that the EU offers with a country outside the EU (or even leaves the EU in order to get rid of 'unpleasant effects' a membership includes).
Besides the EU wouldn't work if every country would only have benefits at all levels. It is always a "give and take". Poorer countries will need the help of the whealtier ones. So some countries do pay more than they receive form the EU at first sight. But the countries with a big economy like Germany/UK also profit as there are no costum inside the EU. They profit from the 'single market'.
So you have to see the full picture.
Germany, as the biggest economy, is also the biggest contributor, Poland is the biggest receiver. The UK contributes much more than it receives too, about €4.7bn more. Why the gap? The UK is a rich country and the EU points out that although it spends less in the UK than the national contribution, the British economy gains much more from access to European markets and contracts.
quoted from: how much does each country pay and where does it get spent?
some other information: Citizenship of the European Union.
EU is a political organization, which rather destroys the economy than provides any benefits. Country (especially country with strong economy like UK) would be fine without EU, just like Switzerland or Norway is fine. UK pays far more to EU budget than it receives.
While not being a member of European Union country can still belong to European Economic Area or participate in any other trade agreements.
It would be hard to leave EU for political reasons as European Union is in fact restored Roman Empire and Pan-European politicians want to rule it.
