The Eu Reputation Of Being A Formidable Economic Block

The financial crisis in America had spread to Europe. Banks in the UK bear the greatest impact from the credit crisis sub-prime housing loans in the U.S. For example, Northern Rock Bank had a bad debt account of up to 191.6 billion U.S. dollars in July 2008 and the Bank of England had to pump 27 billion pounds to rescue Northern Rock Bank. At the end of September 2008, there were some other big banks in Europe such as Dexia and Hypo Real Estate falling in the crisis and these banks were rescured by the governements throught financial bailout. (Alexander, 2008)

The European sovereign debt crisis started in 2008, with the collapse of Iceland's banking system, and spread primarily to Greece, Ireland and Portugal during 2009. The debt crisis led to a crisis of confidence for European

The second phase of GFC stepped after the US bank crisis has evolved into the euro crisis, which thought to be the will of US leading troubles. Europe had its own internal unbalances that proved just as significant as those in US. Southern Europe racked up huge current-account deficits in the first decade while countries in the north ran offsetting surpluses. The imbalances were financed by credit flows from the euro-zone core to the overheated real estate markets of countries like PIIGS (Portugal, Ireland, Italy, Greece and Spain). The euro crisis is also a continuation of financial crisis by other means, as market ignoring the weaknesses of government debts overwhelmed its GDP.

The European Debt Crisis often referred to as the Eurozone Crisis, struck the European Union at the end of 2009.

“Critically evaluate the roles of the main EU institutions (Council, Commission and Parliament) in the management of the continuing economic/financial crisis”

Furthermore, the participating nations believed that it would cause its least productive members—Portugal, Spain, Ireland, and, later, Greece—to modernize their economies. Previously, when experiencing adverse business cycle shocks, these peripheral European countries used currency devaluations to recover, but did not address the underlying disparities of their economies. The arrival of the euro was expected to force a sound fiscal policy, eliminate the bias toward inflation, and encourage widespread structural reforms (Fernández-Villaverde, Garicano, and Santos, 2013).

In 2007 - 2008 the world was struck by a financial crisis which lead the Eurozone into a

❖ Late 2009, fears of a sovereign debt crisis developed concerning some European states. Sovereign debts (Gov’t debt) externally issued rose sharply due to numerous bank bailouts.

The overleveraged positions of financial institutions owing to cheap credit demanded course correction of asset prices across various economies. Many of the EU countries had heavy exposures to the US subprime debt and this scenario became very evident post Lehman collapse. BNP Paribas had serious exposure to CDS of US subprime and several financial institutions across EU had heavy investments in US subprime debts. UK banks had to write down over USD 300 Bn and EU countries around EUR 500 to 800 Bn . This made the financial system of EU vulnerable and the subprime crisis later evolved into Eurozone crisis in EU area. Although, the Eurozone crisis is caused by several

At the tail of the global financial crises in 2007-2008, Europe was ceased by an internal crisis. Though, it was initially contained in the periphery that is southern Europe, its magnitude and possible impact for the rest of Europe & the world was such that it became widely known as the "Eurozone Crisis". The genesis of this crisis can be traced back to the availability of easy money in international financial markets and lack of sufficient policing in the European Union to avoid over consumption.

The EU is widely regarded as a trade power in the current international arena. The trade policy has been a core component of the EU’s growth strategies to enhance international competitiveness by internal development, resulted from the widened and deepened regional integration (Young, 2011: 719). Assimilating neo-liberalist idea to the trade policy has promoted liberalising goods and service trades and contributed to enhancement of competitiveness in the global markets; the EU achieved the largest market in the world in 2005 (Dee and Mortensen, 2014: 3; Young, 2011: 721). Moreover, in international trade, GATT/WTO has promoted multilateral negotiations. Until Uruguay Round, the main discussion was tariff reduction in industrial goods; however, once Uruguay Round approached wider range of issues, legislation of multilateral trade rules has been more important for the WTO members and other actors (Young, 2011: 716). Under this condition, the EU has promoted its competitiveness in the global market with internal development resulted from its territorial enlargement and the institutional system reforms; the EU has adjusted the trade policy against external actors in response to a changing world (ibid: 719). This paper examines how the EU’s external trade policy has changed.

There are many causes for the debt crisis to start. Before world war II Europe had very strict trade barriers between countries examples being currency exchange fees and trade tariffs. Then World War II happened and was so detrimental to Europe they couldn’t continue to have such strict trade barriers. The barriers were then slowly removed with the first barrier removal being steel and coal. This worked well enough that it caused twenty-seven countries to sign the Maastricht Treaty thus forming the European Union (UN). This made trading throughout all Europe easier which caused more trade to occur within Europe.

Due to the economic recession which started in 2008, several members of the European Union became historically known as PIIGS. These states include Portugal, Italy, Ireland, Greece and Spain. The reason why these countries were grouped together is the substantial instability of their economies, which was an evident problem in 2009. The reason why the five countries gained popularity is a serious concern within the EU, with regard to their national debts, especially for Greece. The latter country was involved in a controversial affair after allegedly falsifying its public financial data. In the year 2010, it was evident that the five states were in need of corrective action in order to regain their former financial stability.

Canada which is home of many natural resources, saw lower exportation and the value of these assets diminish as well as manufacturing slow down. Most of Europe and the European Union took major hits as their banking systems fell apart and took on massive amounts of debt from third parties such as the International Monetary Fund. Several smaller countries in Europe such as Greece have still been unable to payback debts as their economies crumbled and saw massive unemployment and their assets diminish in value. This had led to debates on whether smaller countries in the EU can last as members or whether the EU itself should continue.

In September 2008, a major U.S. bank, Lehman Brothers, collapsed triggering an economic crisis in the United States and throughout the globe. What followed this event was five years of economic distress throughout the continent of Europe. The crisis that hit Europe likely stands as the greatest test to the European Union, and the common market and currency in particular. Greece and Ireland both experienced what Jay C. Shambaugh deemed “The Euro’s Three Crises”- a banking crisis, sovereign debt crisis, and a growth crisis. According to this model, poorly capitalized banks, large deficits and public debt, and slow economic growth plagued Irish and Greek economic and political systems . Consequently, both of these nations required bailouts