Economy of the European Union
From Freepedia
| Citizenship |
| Culture |
| Demographics |
| Economy |
| Education |
| Enlargement |
| Foreign relations |
| Geography |
| History |
| Languages |
| Politics |
| Sports |
| Statistics |
The European Union has the largest economy in the world, ahead of that of the United States of America with a 2005 GDP of 12,865,602 vs. 11,734,300, according to the International Monetary Fund. [1] The EU economy is expected to grow further over the next decade as more countries join the union - especially considering that the new States are usually poorer than the EU average, and hence the expected fast GDP growth will help achieve the dynamic of the united Europe. However, It's estimated that the Eurozone will only grow around 0.3 per cent (Q2 2005)1, while other industrialised nations such as the United States is estimated to grow three times as much at around 3.2%. (Q2 2005) 2. The EU set itself an objective under the Lisbon Strategy to make the European Union "the world's most dynamic and competitive economy" by the year 2010, but it is now generally accepted that this target will not be met. The European Union's economic growth has been below that of the United States most years since 1990, and the economic performance of several of its key members, including Germany and Italy, is a matter of serious concern to policy makers.
Contents |
Economic Growth
| Economy of the European Union | |
|---|---|
| Currency | 1 Euro (€) = 100 cents |
| Other Currencies in Member States | 1 Cyprus Pound = 100 cents 1 Czech koruna = 100 haleru 1 Danish krone = 100 øre 1 Kroon = 100 sent 1 Forint = 100 fillér 1 Lat = 100 santims 1 Litas = 100 cents 1 Maltese Lira = 100 cents 1 Zloty = 100 groszy 1 Krona = 100 öre 1 Slovak koruna = 100 halierov 1 tolar = 100 stotins 1 Pound = 100 pence (Not all currencies are legal tender in all of the EU) |
| Statistics | |
| GDP Ranking (2005) | 2nd |
| GDP (2005) | $12 329.110 trillion |
| GDP growth rate (2005) | 3.98% (Second Quarter of 2005 - 0.3%) 1 |
| GDP per Capita (2005) | $26,900 |
| GDP by sector (2004) | agriculture (2.3%), industry (28.3%), services (69.4%) |
| Inflation rate (2005) | 2.1% |
| Pop below poverty line | 17% |
| Labour force | 211.1 million |
| Labour force by occupation (2000) | agriculture (4.3%), industry (29%), services )66.8%) |
| Unemployment rate (2004) | 9.1% |
| Main Industries | Among the world's largest and most technologically advanced industries, including iron and steel, aluminium, petroleum, coal, cement, chemicals, pharmaceuticals, automobiles, aircraft, railway equipment, shipbuilding, electrical power equipment, machine tools, electronics, telecommunications equipment, fishing, food processing, furniture, paper, textiles and clothing, tourism |
| Sources: [2] | |
| Trading Partners | |
| Imports (2005) | €1 035 Billion |
| Main Partners (2001) | Japan, Switzerland, United States |
| Exports (2005) | €970.6 Billion - #1 in world |
| Main Partners (2001) | Japan, Switzerland, United States |
| Public Finances | |
| Public Debt (2004) | €6 509.8 Billion - 63.8% of GDP |
| Public Deficit (2004) | €270.2 Billion |
| External Debt (2001) | |
| Revenues (2003) | |
| Expenses (2004) | €2 134.7 Billion |
| Economic Aid | |
The EU's share of Gross world product (GWP) is falling. GDP growth, though strong as a whole, is being affected by sluggish growth in France and especially Germany and Italy. The Benelux countries also have low growth.
Table to show IMF EU15 GDP Growth Rates, 2004 & 2005 (est.)
| Country | % GDP Growth 2004 | % GDP Growth 2005 |
|---|---|---|
| Austria | 2.4 | 1.9 |
| Belgium | 2.7 | 1.2 |
| Denmark | 2.4 | 2.2 |
| Finland | 2.8 | 1.8 |
| France | 2 | 1.5 |
| Germany | 1.6 | 1.8 |
| Greece | 4.2 | 3.2 |
| Ireland | 5.5 | 5.0 |
| Italy | 1.2 | 0 |
| Luxembourg | 4.4 | 3.1 |
| Netherlands | 1.7 | 0.7 |
| Portugal | 1.0 | 0.5 |
| Spain | 3.1 | 3.2 |
| Sweden | 3.6 | 2.6 |
| United Kingdom | 3.2 | 1.9 |
| Averages | 2.787 | 1.973 |
The EU15 is characterised by low growth comparative to other industrialised nations such as the US (Growth at 4.2% 2004). However it is in line with other G7 nations, with Canada (2.9% 2004) and Japan (2.7% 2004).
Table to show IMF GDP Growth Figures for 10 new EU Memberstates, 2004 & 2005 (est.)
| Country | % GDP Growth 2004 | % GDP Growth 2005 |
|---|---|---|
| Cyprus | 3.7 | 3.8 |
| Czech Rep. | 4.4 | 4.1 |
| Estonia | 7.8 | 7.0 |
| Hungary | 4.2 | 3.4 |
| Latvia | 8.5 | 7.8 |
| Lithuania | 6.7 | 6.8 |
| Malta | 1.0 | 1.5 |
| Poland | 5.4 | 3.0 |
| Slovakia | 5.5 | 5.0 |
| Slovenia | 4.6 | 3.9 |
| Averages | 5.180 | 4.360 |
The 10 new memberstates of Eastern Europe have enjoyed a much higher average percentage growth rate than their West European counter-parts. With the exception of Malta not one state has had a GDP growth of less than 4%, putting these nations up with economics such as the US. Notably the Baltic states have achieved massive GDP growth, with Lativa topping 8.5%, close to China, the world leader at 9% on average for the past 25 years. Reasons for this massive growth include government commitments to stable monetary policy, export-orientated trade policies, low flat-tax rates and the utilisation of relatively cheap labour.
EU25 GDP Growth Table for 2004 & 2005 (est.)
| Country | % GDP Growth 2004 | % GDP Growth 2005 |
|---|---|---|
| EU25 | 3.983 | 3.302 |
The current map of EU growth is one of huge regional variation, with the larger economies suffering from stagnant growth and the new nations enjoying sustained, robust economic growth.
| Year | GDP in trillions | % Change | % of GWP |
|---|---|---|---|
| 2001 | 10.445 | NA | 22.6% |
| 2002 | 10.693 | 2.4% | 22.2% |
| 2003 | 10.953 | 2.4% | 21.7% |
| 2004 | 11.323 | 4.0% | 21.3% |
| 2005 | 11.848 | 3.3% | 21.1% |
Although EU25 GDP is on the increase, the Gross world product is decreasing due to the emergence of economic powers such as China, India and Brazil. In the medium to long term, the EU will be looking to increase GDP growth in the central european economies such as France, Germany and Italy and stabilise growth in the new Eastern European states to ensure sustained economic prosperity.
Currency
The most widely used currency in the European Union is the Euro, which is in use in 12 member states. All other member states, apart from Denmark and the United Kingdom which have special opt-outs, have committed to changing over to the Euro once they have fulfilled the requirements needed to do so. The Stability and Growth Pact sets out the fiscal criteria to maintain for stability and convergence.
For a number of years the Labour government of the United Kingdom was committed to joining the Euro upon a successful referendum of the issue, and when the five economic tests have been passed. The last assessment of five economic tests concluded that only one passed. The matter is no longer being pressed by the Tony Blair government and it is unlikely that a referendum will be held during the present government term, which is likely to finish in 2009 and 2010. Polls consistently show that if one were held the Euro would be heavily rejected.
The official currency, in use in all documents produced by the European Union is the Euro.
Energy resources
The European Union has large coal, oil, and natural gas reserves. There are six oil producers in the European Union, although most oil production happens in the North Sea oilfields. The United Kingdom by far is the largest producer (Russia and Norway are not included as they are not members of the European Union), however Denmark, Germany, Italy, and the Netherlands all produce oil. If it is treated as a single unit, which is not conventional in the oil markets, the European Union is the 8th largest producer of oil in the world, producing 3 244 000 (2001) barrels a day. However, it is also the world's 2nd largest consumer of oil, consuming much more than it can produce, at 14 480 000 (2001) barrels a day.
All countries in the EU have committed to the Kyoto Protocol, and the European Union is one of its biggest exponents.
Trade
The European Union is the largest exporter in the world ([5]) and the second largest importer. Internal trade between the member states is aided by the removal of barriers to trade such as tarrifs and border controls. In the eurozone, trade is helped by not having any currency differences to deal with.
The European Union represents all its members at the World Trade Organisation, and acts on the behalf of member states in any disputes.
Unemployment
On average, the unemployment rate of the European Union is at 8.9%. In comparison to both the United States and Japan this is high. Unemployment varies by member state, the lowest rate is in Ireland with 4.3% whilst the highest is in Poland with 18.1%. The average for the 12 eurozone members is also 8.9%.
Industries
The services sector is by far the most important sector in the European Union, making up 69.4% of GDP, compared to the manufacturing industry with 28.4% of GDP and agriculture with only 2.3% of GDP.
Agriculture
The agricultural sector is supported by subsidies from the European Union in the form of the Common Agricultural Policy. This currently represents 40-50% of the EU's total spending. It guarantees a minimum price for farmers in the EU. This is criticised as a form of protectionism, inhibiting trade, and damaging developing countries.
Tourism
The European Union is a major tourist destination, both from outside of the Union and inside of it. Internal tourism is made more convenient for the citizens of some EU member states by the Schengen treaty and the Euro. All citizens of the European Union are entitled to travel to any member state without the need of a visa. France is the world's number one tourist destination, by number of tourists. Spain, Italy, the United Kingdom, Germany and Austria are all also within the top 10.
Economies of member states
Economic performance varies from state to state. The Growth and Stability Pact governs fiscal policy with the European Union. It applies to all member states, with specific rules which apply to the Eurozone members that stipulate that each state's deficit must not exceed 3% of GDP and its public debt must not exceed 60% of GDP.
All countries, except Greece, Portugal, and Spain with below average GNI per capita are those which joined the EU in May 2004 and all countries with above average GNI per capita come from the existing (pre-2004) member states.
The following table shows information relating to the member states of the European Union, ordered according to the size of their economies. The colours denote how a country is performing relative to the rest of the European Union, above average (green) or below average (red). The smallest and greatest values in each column are emphasised.
| Member State | GDP in billions of $ (USD) (real exchange rates) (2004) | GDP % of EU </br />(2004) | GNI per capita in PPP $ (USD) (2004) | Public Debt % of GDP | Deficit % of GDP | Inflation % Annual | Unemp. % |
|---|---|---|---|---|---|---|---|
| Image:European flag.png European Union | 12 690.6 | 100.0% | 26 192 | 63.8 | 2.6 | 2.0 | 8.8 |
| Image:Flag of Germany.svg Germany | 2 714.4 | 21.4% | 27 950 | 66.0 | 3.7 | 1.8 | 9.6 |
| Image:Flag of the United Kingdom.svg United Kingdom | 2 140.9 | 16.9% | 31 460 | 41.6 | 3.2 | 2.0 | 4.6 |
| Image:Flag of France.svg France | 2 002.6 | 15.8% | 29 320 | 65.6 | 3.7 | 1.8 | 9.8 |
| Image:Flag of Italy.svg Italy | 1 672.3 | 13.2% | 27 860 | 105.8 | 3.0 | 2.2 | 7.8 |
| Image:Flag of Spain.svg Spain | 991.4 | 7.8% | 25 070 | 48.9 | 0.3 | 3.2 | 9.9 |
| Image:Flag of the Netherlands.svg Netherlands | 577.3 | 4.5% | 31 220 | 55.7 | 2.5 | 1.5 | 5.0 |
| Image:Flag of Belgium.svg Belgium | 349.8 | 2.8% | 31 360 | 95.6 | -0.1 | 2.7 | 8.1 |
| Image:Flag of Sweden.svg Sweden | 346.4 | 2.7% | 29 770 | 51.2 | -1.4 | 0.8 | 6.3 |
| Image:Flag of Austria.svg Austria | 290.1 | 2.3% | 31 790 | 65.2 | 1.3 | 2.0 | 4.6 |
| Image:Flag of Denmark.svg Denmark | 243.0 | 1.9% | 31 550 | 42.7 | -2.8 | 1.7 | 4.9 |
| Image:Flag of Poland.svg Poland | 241.8 | 1.9% | 12 640 | 43.6 | 4.8 | 1.4 | 17.8 |
| Image:Flag of Greece.svg Greece | 203.4 | 1.6% | 22 000 | 110.5 | 6.1 | 3.2 | 10.2 |
| Image:Flag of Finland.svg Finland | 186.6 | 1.5% | 29 560 | 43.6 | -2.1 | 1.0 | 8.6 |
| Image:Flag of Ireland.svg Ireland | 183.6 | 1.4% | 33 170 | 29.9 | -1.3 | 1.9 | 4.2 |
| Image:Portugal flag large.png Portugal | 168.3 | 1.3% | 19 250 | 61.9 | 2.9 | 0.6 | 7.2 |
| Image:Flag of Czech Republic.svg Czech Republic | 107.0 | 0.8% | 18 400 | 37.4 | 3.0 | 1.3 | 8.1 |
| Image:Flag of Hungary.svg Hungary | 99.7 | 0.8% | 15 620 | 57.6 | 4.5 | 3.7 | 6.3 |
| Image:Flag of Slovakia.svg Slovakia | 41.1 | 0.3% | 14 370 | 43.6 | 3.3 | 2.5 | 15.5 |
| Image:Flag of Slovenia.svg Slovenia | 32.2 | 0.3% | 20 730 | 29.4 | 1.9 | 1.7 | 5.9 |
| Image:Flag of Luxembourg.svg Luxembourg | 31.1 | 0.2% | 61 220 | 7.5 | -1.1 | 3.2 | 4.7 |
| Image:Flag of Lithuania.svg Lithuania | 22.3 | 0.2% | 12 610 | 19.7 | 2.5 | 2.0 | 8.1 |
| Image:Cyprus flag large.png Cyprus | 15.4 | 0.1% | 22 330 | 62.3 | 3.5 | 1.5 | 5.1 |
| Image:Flag of Latvia.svg Latvia | 13.6 | 0.1% | 11 850 | 14.4 | 0.8 | 6.6 | 9.1 |
| Image:Flag of Estonia.svg Estonia | 10.8 | 0.1% | 13 190 | 4.9 | -1.8 | 4.6 | 7.9 |
| Image:Malta flag large.png Malta | 5.4 | 0.04% | 18 720 | 75.0 | 5.2 | 2.1 | 6.8 |
Regional variation
Comparing the richest areas of the EU can be a difficult task. This is because the NUTS 1 & 2 regions are not homogenous, some of them being very large regions, such as NUTS-1 Hesse (21,100 km²) or NUTS-1 Île-de-France (12,011 km²), whilst other NUTS regions are much smaller, for example NUTS-1 Hamburg (755 km²) or NUTS-1 Greater London (1,580 km²).
One problem with this data is that in some areas, including Greater London, are subject to a large number of commuters coming into the area, thereby artificially inflating the figures. It has the effect of raising GDP but not altering the number of people living in the area, meaning that GDP per capita is higher than it should be.
The decision to delimitate a NUTS region is to a large extent arbitrary (i.e. not based on objective and uniform criteria across Europe), and is decided at European level.
Top 10: economically strongest NUTS-1 and NUTS-2 regions
The 10 NUTS-1 and NUTs-2 regions with the highest GDP per capita are all in the existing member states, before the 10 new member states joined in May 2004. The NUTS Regulation lays down a minimum population size of 3 million and a maximum size of 7 million for the average NUTS-1 region, whereas a minimum of 800.000 and a maximum of 3 million for NUTS-2 regions ¹ [6]. This definition, however, is not respected by Eurostat. E.g.: the région of Île-de-France, with 11.3 million inhabitants, is treated as a NUTS-2 region, while the state of Bremen, with only 662,000 inhabitants, is treated as a NUTS-1 region.
See also: List of NUTS-1, NUTS-2 and NUTS-3 regions
| Rank | NUTS-1 region | 2002 GDP (PPP) per capita in Euros |
|---|---|---|
| 1 Image:Belgium11.jpg | Brussels-Capital, Belgium | 49,645 |
| 2 Image:Luxembourg flag large.png | Luxembourg | 45,026 |
| 3 Image:Reinounido.jpg | Greater London, United Kingdom | 40,068 |
| 4 Image:Flag of Germany.svg | Hamburg, Germany | 39,766 |
| 5 Image:Francia.jpg | Île-de-France (Paris), France | 37,267 |
| 6 Image:Flag of Finland.png | Åland, Finland | 32,795 |
| 7 Image:Flag of Germany.svg | Bremen, Germany | 31,672 |
| 8 Image:Holanda.jpg | West-Nederland (Randstad), Netherlands | 28,705 |
| 9 Image:Italia.jpg | Nord-Ovest (Milan, Turin, Genoa), Italy | 28,488 |
| 10 Image:Flag of Germany.svg | Hesse (Frankfurt), Germany | 28,382 |
| Rank | NUTS-2 region | 2002 GDP (PPP) per capita in Euros |
|---|---|---|
| 1 Image:Reinounido.jpg | Inner London, United Kingdom | 66 761 |
| 2 Image:Belgium11.jpg | Brussels-Capital, Belgium | 49 645 |
| 3 Image:Luxembourg flag large.png | Luxembourg | 45 026 |
| 4 Image:Flag of Germany.svg | Hamburg, Germany | 39 766 |
| 5 Image:Francia.jpg | Île-de-France, France | 37 267 |
| 6 Image:Austria.jpg | Vienna, Austria | 36 603 |
| 7 Image:Reinounido.jpg | Berkshire, Buckinghamshire & Oxfordshire, United Kingdom | 34 251 |
| 8 Image:Italia.jpg | Bozen-Bolzano, Italy | 33 783 |
| 9 Image:Suecia.jpg | Stockholm, Sweden | 33 488 |
| 10 Image:Flag of Germany.svg | Oberbayern, Germany | 33 454 |
Bottom 10: economically weakest NUTS-2 regions
Poland, although not having the lowest GDP per capita of all the states in the European Union, contains 6 of the 10 poorest regions in the EU. All 10 regions are part of the new member states which joined in 2004.
| Rank | NUTS-2 region | GDP per Capita in Euros |
|---|---|---|
| 1 Image:Polonia.jpg | Lubelskie, Poland | 6 764 |
| 2 Image:Polonia.jpg | Podkarpackie, Poland | 6 891 |
| 3 Image:Polonia.jpg | Warminsko-Mazurskie, Poland | 7 217 |
| 4 Image:Polonia.jpg | Podlaskie, Poland | 7 435 |
| 5 Image:Polonia.jpg | Swietokrzyskie, Poland | 7 557 |
| 6 Image:Hungria.jpg | Heves, Nógrád & Borsod-Abaúj-Zemplén, Hungary | 7 902 |
| 7 Image:Polonia.jpg | Opolskie, Poland | 7 917 |
| 8 Image:Hungria.jpg | Hajdú-Bihar, Jász-Nagykun-Szolnok & Szabolcs-Szatmár-Bereg, Hungary | 7 990 |
| 9 Image:Eslovaquia.jpg | Prešovský kraj & Košický kraj, Slovakia | 8 200 |
| 10 Image:Letonia.jpg | Latvia | 8 249 |
Richest & Poorest NUTS-2 Regions (GDP 2002 PPP)
See also: List of all NUTS-2 regions with GDP 2002 data
Footnotes
- Note 1: One region may be classified by Eurostat as a NUTS-1, NUTS-2 as well as a NUTS-3 region. Several NUTS-1 regions are also classified as NUTS-2 regions such as Brussels-Capital or Ile-de-France. Many countries are only classified as a single NUTS-1 and a single NUTS-2 region such as Latvia, Lithuania, Luxemburg and (although over 3 million inhabitants) Denmark.
See also
- European Union
- Economy of Europe
- Economic and Monetary Union
- List of European countries by GDP
- UK rebate
- Economy of:
- Austria, Belgium, Cyrpus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, United Kingdom
References
- "Euro-indicators News release". June 2005 inflation data. URL accessed on July 18, 2005.
- "Euro-indicators News release". May 2005 unemployment data. URL accessed on July 18, 2005.
- "World Bank". GNI data (July 2005). URL accessed on August 4, 2005.
The following is data for GDP growth and GDP totals from the International Monetary Fund:
Link to Growth Rates for the Eurozone
Link to non-Eurozone EU15 countries Growth Rates
Link to 10 new memberstates Growth Rates
