Economy of the European Union

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The economy of the European Union is (collectively) the world's largest, with 30.3% of World GDP (World Bank, Total GDP 2005). It is the principal agricultural, industrial and service power. As of 2006, there are 492 million Europeans in the 27 member states of the European Union.

[edit] Currency

Main articles: euro and eurozone

The official currency of the European Union is the euro, used in all its documents and policies. The Stability and Growth Pact sets out the fiscal criteria to maintain for stability and (economic) convergence. The euro is also the most widely used currency in the EU, which is in use in 13 member states known as the Eurozone. 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 - although Sweden also has an effective opt-out by choosing when or whether to join the European Exchange Rate Mechanism which is the preliminary step towards joining.

[edit] Economic variation

Below is a table showing, respectively, the GDP (PPP), the GDP (PPP) per capita and the GDP (nominal) per capita for the European Union and for each of its 27 member states, sorted by GDP (PPP) per capita. This can be used as a rough gauge to the relative standards of living among member states, with Luxembourg and Ireland the highest; Romania and Bulgaria the lowest. The official candidates are also included in the table. The data set is for the year 2007; all 2007 data are projections.

Member States	GDP (PPP) millions of int. dollars	GDP (PPP) per capita int. dollars	GDP (nominal) per capita int. dollars	Percentage of EU average GDP (PPP) per capita
European Union	13,840,833	27,894	30,937	100%
Luxembourg	35,194	76,025	91,927	273%
Ireland	191,694	45,135	57,163	162%
Denmark	203,502	37,399	54,474	134%
Austria	298,683	36,189	41,266	130%
Finland	179,141	34,162	41,542	122%
Belgium	353,326	33,908	39,331	122%
Netherlands	549,674	33,079	42,763	119%
United Kingdom	2,004,461	32,949	41,960	118%
Germany	2,698,694	32,684	36,779	117%
Sweden	296,715	32,548	44,454	117%
France	1,988,171	31,377	37,417	112%
Italy	1,791,006	30,383	33,078	109%
Spain	1,203,404	28,810	31,727	103%
Greece	274,493	24,733	24,030	89%
Slovenia	49,062	24,459	18,346	88%
Cyprus	19,692	23,419	22,046	84%
Malta	8,447	21,081	14,598	76%
Portugal	217,892	20,673	19,288	74%
Czech Republic	210,418	20,539	15,186	74%
Estonia	25,796	19,243	12,933	69%
Hungary	190,343	18,922	10,914	68%
Slovakia	101,220	18,705	11,307	67%
Lithuania	56,985	16,756	9,620	60%
Latvia	34,426	15,061	10,074	54%
Poland	556,933	14,609	9,214	52%
Bulgaria	82,533	10,844	4,075	39%
Romania	218,926	10,152	6,338	36%
Candidate countries:
Croatia	61,804	13,923	10,559	50%
Turkey	653,298	8,839	5,417	32%
Republic of Macedonia[1]	17,902	8,738	3,040	31%

Source: CIA World Factbook [4]
All other figures, source: IMF web site (2007 GDP PPP, 2007 per capita GDP PPP, 2007 per capita GDP, current prices).

[edit] Economies of member states

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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. However, many larger members have consistently run deficits substantially in excess of 3%, and the eurozone as a whole has a debt percentage exceeding 60% (see below).

All countries, except Greece and Portugal 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 member state 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 sorted by GDP	GDP in billions of $ (USD) (2006)	GDP % of EU (2006)	GDP per capita in PPP $ (USD) (2006 est.)	Public Debt % of GDP	Deficit % of GDP	Inflation % Annual	Unemp. %
European Union	13 840.8	100.0%	27 849	63.8	-2.6	2.0	7.5
Germany	2 698.7	19.5%	32 684	66.0	-3.7	1.8	7.7
United Kingdom	2 004.4	14.5%	32 949	41.6	-3.2	2.0	5.4
France	1 998.2	14.4%	31 377	65.6	-3.7	1.8	8.4
Italy	1 791.0	12.9%	30 383	105.8	-3.0	2.2	6.7
Spain	1 203.4	8.7%	28 810	48.9	-0.3	2.7	8.6
Netherlands	549.7	4.0%	33 079	55.7	-2.5	1.5	3.6
Belgium	353.3	2.6%	33 908	95.6	-0.1	2.7	7.8
Sweden	296.7	2.1%	32 548	51.2	-1.4	0.8	6.3
Austria	298.7	2.2%	36 189	65.2	-1.3	2.0	4.5
Denmark	203.5	1.5%	37 399	42.7	-2.8	1.7	3.2
Poland	556.9	4.0%	14 609	43.6	-4.8	1.4	12.6
Greece	274.5	2.0%	24 733	106.5	-2.8	3.2	8.7
Finland	179.1	1.5%	34 162	43.6	-2.1	1.0	7.0
Ireland	191.7	1.3%	45 135	29.9	-1.3	1.9	4.4
Portugal	217.9	1.6%	20 673	61.9	-2.9	3.0	7.2
Czech Republic	210.4	1.5%	20 539	37.4	-3.0	1.3	6.6
Hungary	190.3	1.4%	18 922	57.6	-4.5	3.7	7.9
Slovakia	101.2	0.7%	18 705	36.9	-2.9	2.5	11.0
Slovenia	49.1	0.4%	24 459	29.4	-1.9	1.7	5.0
Luxembourg	35.2	0.2%	76 025	7.5	-1.1	3.2	5.0
Lithuania	57.0	0.3%	16 756	19.7	-2.5	2.0	6.1
Cyprus	19.7	0.1%	23 419	62.3	-3.5	1.5	4.7
Latvia	34.4	0.2%	15 061	14.4	-0.8	6.6	6.3
Estonia	25.8	0.2%	19 243	4.9	-1.8	4.6	4.2
Malta	8.5	0.1%	21 081	75.0	-5.2	2.1	6.8

[edit] Economic growth

The EU's share of Gross world product (GWP) is stable at around one fifth [5]. GDP growth, though strong in the new member states, is being affected by sluggish growth in France and especially Germany, Italy and Portugal. Belgium and the Netherlands also have a relatively low growth rate. Greece along with Ireland on the other hand have the strongest growth rates in the Union.

Population and GDP per capita of EU member states and some candidates.

GDP (PPP) per capita 2007 showing countries above and below EU average

IMF EU15 GDP growth rates	IMF New member GDP growth rates
Member State % GDP Growth 2004 2005  Austria 2.4 2.0  Belgium 2.4 1.5  Denmark 1.9 3.2  Finland 3.5 2.9  France 2.0 1.2  Germany 1.2 0.9  Greece 4.7 3.7  Republic of Ireland 4.3 5.5  Italy 1.1 0.0  Luxembourg 4.2 4.0  Netherlands 2.0 1.5  Portugal 1.2 0.4  Spain 3.1 3.4  Sweden 3.7 2.7  United Kingdom 3.3 1.9	Member State % GDP Growth 2004 2005  Cyprus 3.9 3.7  Czech Republic 4.2 6.1  Estonia 7.8 9.8  Hungary 5.2 4.1  Latvia 8.6 10.2  Lithuania 7.3 7.6  Malta -1.5 2.5  Poland 5.3 3.4  Romania 4.1 8.5  Slovakia 5.4 6.1  Slovenia 4.2 4.0

Current forecasts see the Union's economy achieving growth of 2.3% during 2006 [6]. The ten new member states of Eastern Europe have enjoyed a higher average percentage growth rate than their Western European counterparts. Notably the Baltic states have achieved massive GDP growth, with Latvia 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-oriented trade policies, low flat-tax rates and the utilisation of relatively cheap labour.

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.

Although EU25 GDP is on the increase, the percentage of 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.

[edit] Energy resources

The European Union has large coal, oil, and natural gas reserves. There are six oil producers in the European Union, primarily in North Sea oilfields. The United Kingdom by far is the largest producer, 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 7th largest producer of oil in the world, producing 3,424,000 (2001) barrels a day. However, it is also the world's 2nd largest consumer of oil, consuming much more than it can produce, at 14,590,000 (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. The European Commission published proposals for the first comprehensive EU energy policy on January 10, 2007.

see also: Renewable energy in the European Union and category:Energy in the European Union

[edit] Trade

The European Union is the largest exporter in the world ([7]) and the second largest importer. Internal trade between the member states is aided by the removal of barriers to trade such as tariffs and border controls. In the eurozone, trade is helped by not having any currency differences to deal with amongst most members. The European Union Association Agreement does something similar for a much larger range of countries, partly as a so-called soft approach ('a carrot instead of a stick') to influence the politics in those countries.

The European Union represents all its members at the World Trade Organization, and acts on behalf of member states in any disputes.

[edit] Unemployment

The Unemployment rate in the European Union in February 2007 was 7.5%, however the rate varies by member state, the lowest rates are in Denmark (3,2%), the Netherlands (3,6%), Estonia (4,2%) and Ireland (4,4%), the highets rates are in Greece (8,7%), Slovakia (11,0%) and Poland (12,6%), this compares with 4.1% in Japan and 4.7% in the United States [8].

[edit] 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.

[edit] Agriculture

The agricultural sector is supported by subsidies from the European Union in the form of the Common Agricultural Policy (CAP). 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; one of the most vocal opponents is the UK, the second largest economy within the bloc, which has repeatedly refused to give up the annual UK Rebate unless the CAP undergoes significant reform; France, the biggest benefactor of the CAP and the bloc's third largest economy, is its most vocal proponent.

[edit] Tourism

The European Union is a major tourist destination, attracting visitors from outside of the Union and citizens travelling inside 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. If the EU component states are considered separate entities, France is the world's number one tourist destination for international visitors, followed by Spain, Italy and the United Kingdom at 2nd, 5th and 6th spots respectively. If the EU is considered a single entity, the number of international visitors is less, as most visitors to EU nations are from other EU member states.

[edit] 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, inflating the GDP per capita figure.

The data is used to define regions that are supported with financial aid in programs such as the European Regional Development Fund.

The decision to delineate a Nomenclature of Territorial Units for Statistics (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 (See also: Regions of the European Union).

[edit] 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 first seventeen member states: none are in the 10 new member states that 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 [9]. 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	2003 GDP (PPP) per capita in Euros
1	Brussels-Capital, Belgium	51,658
2	Luxembourg	50,844
3	Hamburg, Germany	40,011
4	Greater London, United Kingdom	38,255
5	Île-de-France (Paris), France	37,687
6	Åland, Finland	33,542
7	Bremen, Germany	31,909
8	West-Nederland (Randstad), Netherlands	29,918
9	Lombardy and Northwest Italy (Milan, Turin, Genoa), Italy	28,513
10	Hesse (Frankfurt), Germany	28,433
Rank	NUTS-2 region	2003 GDP (PPP) per capita in Euros
1	Paris, France	67,870
2	Inner London, United Kingdom	66,761
3	Hauts-de-Seine, France	62,374
4	Brussels-Capital, Belgium	51,658
5	Luxembourg	50,844
6	Hamburg, Germany	40,011
7	Vienna, Austria	37,158
8	Berkshire, Buckinghamshire & Oxfordshire, United Kingdom	35,894
9	Bolzano, Italy	34,791
10	Stockholm, Sweden	34,331

[edit] Bottom ten: economically weakest NUTS-2 regions

Poland, although not having the lowest GDP per capita of all the states in the European Union, contains six of the ten poorest regions in the EU. All ten regions are part of the new member states which joined in 2004.

Rank	NUTS-2 region	2003 GDP (PPP) per capita in Euros
1	Lubelskie, Poland	7,211
2	Podkarpackie, Poland	7,217
3	Podlaskie, Poland	7,752
4	Świętokrzyskie, Poland	7,978
5	Warminsko-Mazurskie, Poland	8,048
6	Opolskie, Poland	8,112
7	Northern Hungary, Hungary	8,287
8	Prešovský kraj & Košický kraj, Slovakia	8,430
9	Northern Great Plain, Hungary	8,476
10	Southern Great Plain, Hungary	8,786

[edit] Richest & Poorest NUTS-2 Regions (GDP 2003 PPP)

See also: List of all NUTS-2 regions with GDP 2003 data

Member State	Region	GDP per capita
		in Euros	As % of EU(25) average
European Union		21,741	100.0%
Austria		26,282	120.9%
Richest	Vienna	37,158	170.9%
Poorest	Burgenland	18,420	84.7%
Belgium		25,677	118.1%
Richest	Brussels-Capital	51,658	237.6%
Poorest	Hainaut	16,860	77.6%
Cyprus		17,377	79.9%
Czech Republic		14,750	67.8%
Richest	Prague	30,052	138.2%
Poorest	Moravian-Silesian Region	11,603	53.4%
Denmark		26,315	121.0%
France		24,213	111.4%
Richest	Paris	67,870	312.2%
Poorest	French Guiana	12,516	57.6%
Germany		23,569	108.4%
Richest	Hamburg	40,011	184.0%
Poorest	Dessau	15,413	70.9%
Estonia		10,489	48.2%
Finland		24,538	112.9%
Richest	Åland	33,542	154.3%
Poorest	East Finland	18,281	84.1%
Greece		17,634	81.1%
Richest	Central Greece	25,159	115.7%
Poorest	West Greece	13,560	62.4%
Hungary		12,402	59.3%
Richest	Central Hungary	20,627	94.9%
Poorest	Northern Hungary	8,287	38.1%
Ireland		29,161	134.1%
Richest	Southern and Eastern	32,446	149.2%
Poorest	Border, Midland and Western	20,102	92.5%
Italy		23,448	107.9%
Richest	Bolzano	34,791	160.0%
Poorest	Calabria	14,898	68.5%
Latvia		8,882	40.9%
Lithuania		9,846	45.3%
Luxembourg		50,844	233.9%
Malta		15,797	72.7%
Netherlands		27,132	124.8%
Richest	Utrecht	33,148	152.5%
Poorest	Flevoland	19,439	89.4%
Poland		10,215	47.0%
Richest	Mazowieckie	15,833	72.8%
Poorest	Lubelskie	7,211	33.2%
Portugal		15,841	72.9%
Richest	Lisbon	22,670	104.3%
Poorest	Norte	12,477	57.4%
Slovakia		11,298	52.0%
Richest	Bratislava region	25,190	115.9%
Poorest	Prešovský kraj & Košický kraj	8,430	38.8%
Slovenia		16,527	76.0%
Spain		21,174	97.4%
Richest	Madrid	28,013	128.8%
Poorest	Extremadura	13,871	63.8%
Sweden		25,193	115.9%
Richest	Stockholm	34,331	157.9%
Poorest	Gävleborg, Dalarna, & Värmland Counties	21,342	98.2%
United Kingdom		24,945	117.8%
Richest	Inner London	66, 761	307.1%
Poorest	West Wales & The Valleys	16,474	75.8%

[edit] Comparison with regional blocs

[edit] References

1. ^ Recognised only as the former Yugoslav Republic of Macedonia (FYROM) by the EU.

• 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.
• The NUTS definition depends largely on political district definition, rather than on transnational consistent economic units. For example is Munich larger than Stockholm and much larger than Bremen (and has a higher GDP than both), nevertheless as Munich is no state on its own in Germany it's no NUTS-2 region.
• Euro-indicators News release. June 2005 inflation data. Retrieved on July 18, 2005.
• Euro-indicators News release. May 2005 unemployment data. Retrieved on July 18, 2005.
• World Bank. GNI data (July 2005). Retrieved on August 4, 2005.

The following links are used for the GDP growth and GDP totals (IMF):

• Link to Growth Rates for the Eurozone
• Link to non-Eurozone EU15 countries Growth Rates
• Link to 10 new memberstates Growth Rates
• Link to the 500 largest European Companies

[edit] See also

• Sapir Report

European Union Portal

v • d • e

World Trade Organization (WTO)

Albania • Angola • Antigua and Barbuda • Argentina • Armenia • Australia • Bahrain, Kingdom of • Bangladesh • Barbados • Belize • Benin • Bolivia • Botswana • Brazil • Brunei Darussalam • Burkina Faso • Burundi • Cambodia • Cameroon • Canada • Central African Republic • Chad • Chile • China • Colombia • Congo • Costa Rica • Cote d'Ivoire • Croatia • Cuba • Democratic Republic of the Congo • Djibouti • Dominica • Dominican Republic • Ecuador • Egypt • El Salvador • European Communities¹ • Fiji • Former Yugoslav Republic of Macedonia (FYROM) • Gabon • The Gambia • Georgia • Ghana • Grenada • Guatemala • Guinea • Guinea Bissau • Guyana • Haiti • Honduras • Hong Kong, China • Iceland • India • Indonesia • Israel • Jamaica • Japan • Jordan • Kenya • Korea, Republic of • Kuwait • Kyrgyz Republic • Lesotho • Liechtenstein • Macao, China • Madagascar • Malawi • Malaysia • Maldives • Mali • Mauritania • Mauritius • Mexico • Moldova • Mongolia • Morocco • Mozambique • Myanmar • Namibia • Nepal • New Zealand • Nicaragua • Niger • Nigeria • Norway • Oman • Pakistan • Panama • Papua New Guinea • Paraguay • Peru • Philippines • Qatar • Rwanda • Saint Kitts and Nevis • Saint Lucia • Saint Vincent & the Grenadines • Saudi Arabia • Senegal • Sierra Leone • Singapore • Solomon Islands • South Africa • Sri Lanka • Suriname • Swaziland • Switzerland • Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu • Tanzania • Thailand • Togo • Trinidad and Tobago • Tunisia • Turkey • Uganda • United Arab Emirates • United States of America • Uruguay • Venezuela (Bolivarian Republic of) • Vietnam • Zambia • Zimbabwe

¹ All twenty-seven member states of the European Union are also members of the WTO in their own right:
Austria • Belgium • Bulgaria • Cyprus • Czech Republic • Denmark • Estonia • Finland • France • Germany • Greece • Hungary • Ireland • Italy • Latvia • Lithuania • Luxembourg • Malta • Netherlands (— For the Kingdom in Europe and for the Netherlands Antilles) • Poland • Portugal • Romania • Slovakia • Slovenia • Spain • Sweden • United Kingdom