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EUROPEAN ECONOMY

Dr. Marielle GOTO

CONTENTS
• Part I- European Union basics • Part II- European monetary Policy

• Part III- Policy mix
• Part IV- Enlargement

• Part V- European policies and firms
• Part VI-Presentations
Dr. Marielle GOTO

PART I- EUROPEAN UNION BASICS

Dr. Marielle GOTO

Marielle GOTO . Historical steps of the European integration • III. A quick glance at the European Union • II. European economic outlook Dr.Contents • I. European Institutions • IV.

A QUICK GLANCE AT THE EUROPEAN UNION • Continuing evolving process of integration and enlargement since the 1950’s • 27 different countries at the moment (GDP. mainland.I. language. Marielle GOTO . size. outermost regions…) • Analysis of the economic strengthes and weaknesses of the European Union • A complex and ongoing process Dr.

Marielle GOTO .European Union Countries Dr.

2 million km² (9.Some figures  500 million inhabitants  4. 40% of the world trade Dr. Marielle GOTO .6 for China and the United States)  At the moment 27 countries  First GDP in the world (a quarter of it).

How rich is the EU compared to the rest of the world? 38 700 27 800 25 100 12 508 9819 4 400 3 329 1 326 468 Japan Russia United States EU China Japan 12 200 EU China Russia United States Size of economy: 2008 gross domestic product in billion of euros Wealth per person: 2008 gross domestic product per person .

271 Luxembourg 137 Ireland Netherlands Austria Sweden Denmark United Kingdom Germany Finland Belgium France Spain Italy EU-27 Cyprus 101 100 135 123 122 118 117 116 115 114 107 103 95 94 91 Greece Slovenia Czech Republic Malta Portugal Slovakia Estonia Hungary 2008 GDP per inhabitant 80 76 76 Index where the average of the 27 EU-countries is 100 72 68 63 61 58 Lithuania Poland Latvia 46 40 Romania Bulgaria GDP per inhabitant: the spread of wealth 56 .

GDP per Capita Source: Eurostat .

Marielle GOTO .Source: Eurostat Dr.

 60 years of history II-Historical steps of the European integration A deepening integration Complex and eventful process Important enlargement (a fourfold rise in the number of member countries in 60 years) Dr. Marielle GOTO .

Iceland . Norway. Marielle GOTO . 1957 1960 1965 Dr. Italy.1950 • Speech of Robert SCHUMAN based on the ideas of Jean Monnet • Proposal of a pool of coal and steel sources by France and Germany 1951 • Signature of the treaty establishing the European Coal and Steel Community (ECSC) by 6 countries: Belgium. EEC and Euratom • Creation of a single Council and a single Commission. the Federal Republic of Germany. Luxembourg and the Netherlands • The same six countries sign the treaties of Rome related to: • the European Economic Community(EEC) • the European Atomic Energy Community (Euratom) • the Stockholm Convention establishes the • European Free Trade Association (EFTA) with countries outside the EEC like the United Kingdom. France. Switzerland • Merger of the ECSC.

Marielle GOTO . between member countries. Ireland and United Kingdom join the European communities. It is the first enlargement. are abolished on industrial goods 1973 • Denmark.1968 • Establishment of a Common External Tariff (CET) and custom duties. 1979 • The first direct elections to the 410-seat European Parliament 1981 • Greece is the new member of the European Communities 1985 • The Schengen Agreement is signed in order to suppress checks at the borders between member states of the European Communities (free movment of persons) Dr.

• Spain and Portugal join the European Communities club 1986 • The European Single Act is signed in Luxembourg and the Hague 1986 • The Treaty on European Union is signed at Maastricht. • One of the aim is the creation of an economic and monetary union with a single currency 1992 • The single market is implemented 1993 • Austria. Marielle GOTO . Finland and Sweden become part of the European Union 1995 Dr.

Portugal. Germany. Estonia.1997 • The Amsterdam Treaty is signed 1999 • The Euro is adopted by 11 countries and used on their financial markets for non-cash transactions • The European Central Bank (ECB) takes charge of the common monetary policy for all th emembers of the European Monetary Union (EMU) 2001 • Signature of the Treaty of Nice • The aim is to allow enlargement thanks to a change in the decison making process • Euro-notes and coins are implemented in the Euro area. Italy. Spain and The Netherlands 2002 2004 • Cyprus. Belgium. Ireland. Poland. Slovakia and Slovenia join the European Union. Luxembourg. the Czech Republic. Greece. France. Latvia. This area comprises 12 countries: Austria. Hungary. Finland. Lithuania. Dr. Marielle GOTO . Malta.

2004 • The European Constitution is adopted in Rome but was to be ratified by member states 2005 • Rejection of the European Constitutions by voters in France and the Netherlands as a result of referendums 2007 • Bulgaria and Romania join the European Union • Slovenia adopts the Euro • The Lisbon Treaty (a modifed version of the European Constitution) is signed 2007 2008 • Malta and Cyprus adopt the Euro Dr. Marielle GOTO .

the European Financial Stability Mechanism and May 2010 International Monetary Fund financing 21 July 2011 • New rules for the European Financial Stability Facility and new package bailout of 109 billion € for Greece with the assistance of the private sector (banks) Dr.2009 • Slovakia adopts the Euro • The Lisbon Treaty has been implemented 2009 2011 • Estonia has joined the Euro area •Greece has benefited from a financial assistance package of EUR110 billion •Measures package of 750 billion € to create a safety net with the creation of the European Financial Stability Facility (EFSF). Marielle GOTO .

Marielle GOTO .A focus on European treaties Dr.

Marielle GOTO .Main European Treaties • Treaty of Rome(1957): • Creation of a common market for goods and services • Maastricht Treaty (1992): • Creation of an economic and monetary union • Implementation of convergence criteria to become a member of the monetary union • Amsterdam Treaty (1997) • New fiscal criteria commitments added to the convergence criteria • Technical treaty that renumbered articles from the EU and the EC treaties Dr.

Marielle GOTO .• Treaty of Nice (2003): • Preparation of the important enlargements of 2004 and 2007 with mostly countries for the Eastern Europe • Lisbon Treaty (2007): • A strengthened role for the European parliament • Qualified majority: From 2014 a double majority: a decision is taken by 55% of the Member States representing at least 65% of the Union’s population Dr.

Herman Van Rompuy. Catherine Ashton. • A high representative of the Union for Foreign Affairs and Security function is created. Marielle GOTO . Dr. At the moment.• The function of President of the European Council is created. At the moment. This president is elected for 2 and a half years.

III. recommandations and directives are taken by the European Union institutions • The EU institutions rules are modified by the different treaties • The three main institutions are the European Council. the European Commission and the European Parliament Dr. Marielle GOTO . European Institutions • Regulation.

the institutions shall adopt regulations.Difference between regulations. directives. decisions. decisions. as to the result to be achieved. but shall leave to the national authorities the choice of form and methods • A decision shall be binding in its entirety upon those to whom it is addressed • Recommendations and opinions shall have no binding force Dr. recommendations and opinions • To exercise the Union's competences. Marielle GOTO . recommendations and opinions • A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States • A directive shall be binding. upon each Member State to which it is addressed. directives.

The EU institutions Institutions European Council (Head of States) European Parliament (direct election of the members) Council of Ministers (Council of the European Union) Economic and Social Committee European Commission (the common interest) Committee of the Regions European Central Bank Court of Justice Court of Auditors European Investment Bank Agencies .

The Council of the European union • Present presidency of the Council of the European Union: Poland Council of Ministers (Council of the European Union) • The high representative of the Union for Foreign Affairs and Security is the permanent chairperson for the foreign affairs ministers’ council Dr. Marielle GOTO .

experts: discuss. consult Commission: makes formal proposal Parliament and Council of Ministers: decide jointly National or local authorities: implement Commission and Court of Justice: monitor implementation .How EU laws are made How European Laws are established Citizens. interest groups.

IV. European Economic Outlook • Before the crisis • Different economic situations • Different economic profiles • From 2009 • GDP growth rates are not high enough to solve sovereign debt issues • Labour market still weak with high unemployment Dr. Marielle GOTO .

Marielle GOTO .The differences among European Union countries • Difference in trade openness • Difference in financial exposure • Difference in competitiveness • Questions of fiscal sustainability • A rise in the countries differences Dr.

European GDP real growth rate 2000-2010 (%) Source: Eurostat Dr. Marielle GOTO .

INFLATION RATE Dr. Marielle GOTO .

Marielle GOTO .Inflation rate 2010 Source: Eurostat Dr.

Unemployment rate July 2011 Source: Eurostat Dr. Marielle GOTO .

ongoing and complex history of economic integration • European integration is mostly a political process • Increasing economic differences with the successive enlargements • The rules of the monetary integration process are put to the test since the 2008 global crisis Dr. Marielle GOTO .Conclusion • A long.

vol.. Financial Times. and Pisani-Ferry J. Marielle GOTO .. The European Union Economics and policies. « European Economic and Monetary integration and the Optimum Currency Area ».. 2000. «Systemic conflict and regional monetary integration: the case of Europe ». 1998.2001. Cambridge University Press • Mongelli F..52.Additional references • Benassy-Quere A. n°3. European Economy n°302 Dr.. 2004. Blackwell publishers • Henning C.. Coeure B. Prentice Hall • Hallwood C. Jacquet P. Politique économique. 2008. International Money and Finance. de boeck • El-Agraa A. in International organization.& MacDonald R..