The Impact Of European Economies On The European Economy

The European Union is one of the most famous Economic blocs in our recent times. It is the culmination of efforts after the devastating Second World War. It currently includes 28 states with varied cultural and historical backgrounds and even different languages. It now has more than 30 separate international trade agreements with many countries such as Colombia and South Korea (Encyclopedia of Management).

The German economy is the largest in Europe and worldwide Germany has the fifth largest economy (“World fact book”, n.d.). It is clear that the German economy holds a key position in the world marketplace. Gross domestic product (GDP) growth is an important consideration for foreign investment as it speaks to the overall health of an economy. GDP growth can be attributed to spending and investments both on and from imports and exports (“What is GDP”, 2005). In 2014 the reported GDP growth rate in Germany was 1.4%, up .9 % from the prior year (“World fact book” n.d.). The Eurozone was deeply affected by a recession stemming from the US and made worse by poor economic conditions in Greece and Spain, among other countries in

By the end of 2008, the European Union began experiencing rippling effects of the United States financial crisis. Several member countries, most notably on the southern end of the continent, faced high levels of debt and unemployment. Portugal, Iceland, Ireland, Greece, and Spain, derogatively referred to as “PIIGS,” required extensive economic support from the EU in order to repay government debts and bail-out private banks. Disbursal of aid in 2010 proved successful in promoting economic recovery in some countries; however, the vast majority observed only slight economic improvement which led to doubts regarding the effectiveness of the harsh austerity measures implemented. Ireland has most clearly benefited from the financial support of the European Union as the country’s unemployment rate has dropped below ten percent and is expected to witness 4.5% GDP growth in 2016. Portugal, on the other hand, shows little fiscal improvement as evident in an unemployment rate of 13% and an expected GDP growth of only 1.6% in 2016. Although both countries faced tough financial crises in 2010, Ireland has notably outperformed Portugal in resolving the situation. The weak economy in Portugal, as well as continued fiscal hardship in the remaining “PIGS” countries, threaten the preservation of the European Union as financial inequality between the members persists.

The European Union’s economy, despite being one of the largest in the world; very comparable to the size of the economy of the United States, does not provide a great benefit to the UK. Both the economies of the UK and of the EU are less than ideal for the respective nations, but

Over the 15 years the German has been widely viewed as the economic catalyst and stabilizer for its fellow European Union states. Even following the Financial Crisis in 2008, the German economy was able to bounce back quicker than neighboring Eurozone states the source of German success points to a high export led growth economy with a competitive manufacturing sector, lower unemployment, balanced budget, and low costs to borrow. With most economic indicators pointing to strong future growth, it remains to be seen whether a spillover effect occurs to the rest of the EU. Despite a number of reforms, EU countries continue to suffer due to lack of global competitiveness. In dire straits, Greece continues to leverage the support of the European Central Bank and Eurozone states to avoid another financial collapse. In support of Greece, Germany itself lent the country €56 billion, however Germany has begun to lose patience over Greece’s attempts to renegotiate terms of its bailout. As the German economy has persevered through economic turmoil, while Eurozone has struggled, Germany continues to be a shining light of prosperity in the European Union.

After the long awaited single currency implementation known as the euro, there have been many ups and downs to this monetary system. Many have been quick to criticize while others still praise its value claiming it will soon be valued strongly against the dollar. Our paper looks into the various aspects of the euro and the progress it has made since its initiation. We begin with a brief history of the euro then move on by raising some questions concerning the effects of the euro on various economic aspects such as competition and global financial institutions. We then provide insight to the various strengths and weaknesses of the euro and the implications this currency has on various institutions such as banks.

Zooming in on the Economic Developments in the European UnionIn the globalizing world, it is but logical that most trade groups contain countries in the same area of the world to offer trade agreements to obtain mutual benefits. Neighboring countries tend to ally for several reasons:•The distances that goods need to travel between such countries is short.

The euro zone which is officially called the "euro area" consists of 17 countries. In other words, it consists of countries which are also part of the European Union. The European Union consists of approximately 27 member states. For a country to be a member of the euro zone it is necessary for it to be a member of the European Union. A single currency was introduced as a result of European union reforms and the currency was named as the "Euro". Those countries which adopted the Euro as their currency by giving up their local currencies became the member states of the Euro Zones. These countries include: Austria, Belgium, Estonia, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

This study analyses the extent to which the Economic and Monetary Union of the European Union’s convergence criterias have an influence on the fiscal policy in the member countries, and if there is connection, if this connection is positive or negative for each member state. It will look on the question if it is possible to unite so many different countries under one union, and if you can do this, while the countries still are still sovereign. This research will be carried out through both EU’s own data, critical articles about the Monetary Union and statistics about the economical situation in each of the member states.

‘Observers warned for well over a decade that the EU was ill-prepared’ (Pisani-Ferry & Sapir, 2010) for a Financial Crisis if one was to occur. This was certainly the case as Europe was engulfed in the financial crisis. The spreading of the credit crisis across Europe, originating from The USA, exposed Europe’s weaknesses and tested its strength (Sayek & Taskin, 2014). This paper reveals how lack of regulation and supervision alongside with banks who let their solvency and liquidity ratios run too low, which consequently resulted in the financial crisis. Furthermore, paper examines how the financial crisis solution varies with the macroeconomic structure of the economy.

Issues in relation to Euro financial crisis have been essential in generation of intriguing questions of whether the common currency will have the substantial strength and competence towards surviving and overcoming the threat. Euro zone members should focus on striving to hold things together and weather the storm with reference to recent financial challenges in association with the common currency. Eurozone continues to face diverse economic as well as financial problems. In the first instance, the region faces fiscal crisis, which has been imminent in Greece and other nations such as Ireland. In addition, the region has been facing competitiveness crisis, long evident in the large current account deficits, and larger current account imbalances between European Union. In the third instance, the region faces banking crisis, which unfolded in Ireland prior to becoming acute in Spain (Fred 3).

“If the Euro fails, then not only the currency fails… Europe will fail, and, with it, the idea of European unity.” Merkel’s words preclude the diminishing consensus within European Union, no matter the attempts to solidify support within Europe. The 2008 Eurozone crisis has lead to distrust and unease in Europe. The Treaty of Lisbon (2009) was the re-organisation of the European Union policy-making structure after the pillar formation of the Treaty of Maastricht (1993). The Treaty of Lisbon, no matter how triumphantly proclaimed to the people, has given increasing control to the European Parliament and other intergovernmental bodies, and less in the hands of the states or the people. This, coupled with dissatisfaction of the EU and an

The economy is most develop in the US and Europe. When the crash happened in 2008, Europe economy fell into recession extremely. Until today, it has yet to fully recover. Compare with the US that remains the economic giants. After nearly 10 years of economic recovery, we can see long term effects in banking, politics, housing and employment. So, what has been going on politically and economically in Europe? And what will we estimate about the economy of the US and Europe prospect 5 plus years from now? The right answers are not simple, so let me explain.

As is known to all, widespread joblessness in Greece and Spain pushed the unemployment rate in the eurozone to the worst level since 1999. Coupled with the pitched unemployment rate, the economy has suffered from fluctuation. Take the example of the news released in recent time, which is concerned with the financial situation in Eurozone. As what we can see in the news report, during the business

The division of fiscal transfer mechanism instead of having a single mechanism has been criticized for two main reasons (Furceri, 2004). Firstly, the ordinary monetary policy of European Monetary Union has been commonly known to cause asymmetric effects among the member states. The asymmetric effect of the monetary policy will be unable to ensure the status of economy of the whole European Union. Next, it is possible that the single fiscal policy of the countries involving in European Union will be ineffective in smoothing cyclical fluctuations of the Gross Domestic Product (GDP) around the potential level. GDP, which is one of the principal indicator to determine the size of the economy of a country, should be maintained around the potential level to ensure a healthy growth of economy. However, the implement of single fiscal policy in European Union is inefficient to reduce the impacts of continual change of GDP. If the problem of asymmetric shocks continued, the imbalance contribution of economy among the member states will become more