Economy of the European Union
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|Economy of the European Union|
|Currency||1 Euro (€) = 100 cents|
|Other currencies in member states||
Bulgarian lev • Cypriot pound • Czech koruna • Danish krone • Estonian kroon • Hungarian forint • Latvian lats • Lithuanian litas • Maltese lira • Polish złoty • Romanian leu • Swedish krona • Slovak koruna • Pound sterling
|GDP Ranking||1st (2006)|
|GDP (PPP)||$12.82 trillion (2006)|
|GDP growth rate||2.8% (2006)|
|GDP per Capita||$29,300 (2006)|
|GDP by sector||agriculture (2.1%), industry (27.3%), services (70.5%) (2006)|
|Pop below poverty line||17%|
|Labour force||221.5 million|
|Labour force by occupation||agriculture (4.4%), industry (27.3%), services (67%) (2006)|
|Sources:   |
|Imports||$1.466 trillion (2006)|
|Main Partners||Japan, Switzerland, United States (2001)|
|Exports||$1.33 trillion - #1 in world (2006)|
|Main Partners||Japan, Switzerland, United States (2001)|
|Public Debt||€6 509.8 Billion - 63.8% of GDP (2004)|
|Public Deficit||€270.2 Billion (2004)|
|Expenses||€2 134.7 Billion (2004)|
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.
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.
 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)
|Percentage of EU
(PPP) per capita
|Republic of Macedonia||17,902||8,738||3,040||31%|
 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. 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.
sorted by GDP
of $ (USD)
% of EU
in PPP $ (USD)
% of GDP
% of GDP
|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|
|Czech Republic||210.4||1.5%||20 539||37.4||-3.0||1.3||6.6|
 Economic growth
The EU's share of Gross world product (GWP) is stable at around one fifth . 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.
|IMF EU15 GDP growth rates||IMF New member GDP growth rates|
Current forecasts see the Union's economy achieving growth of 2.3% during 2006 . 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.
 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.
The European Union is the largest exporter in the world () 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.
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 .
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.
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.
 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).
 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 . 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.
|Rank||NUTS-1 region||2003 GDP (PPP) per capita
|4||Greater London, United Kingdom||38,255|
|5||Île-de-France (Paris), France||37,687|
|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
|2||Inner London, United Kingdom||66,761|
|8||Berkshire, Buckinghamshire & Oxfordshire, United Kingdom||35,894|
 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
|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|
 Richest & Poorest NUTS-2 Regions (GDP 2003 PPP)
|Member State||Region||GDP per capita|
|in Euros||As % of EU(25) average|
|Richest||Southern and Eastern||32,446||149.2%|
|Poorest||Border, Midland and Western||20,102||92.5%|
|Poorest||Prešovský kraj & Košický kraj||8,430||38.8%|
|Poorest||Gävleborg, Dalarna, & Värmland Counties||21,342||98.2%|
|Richest||Inner London||66, 761||307.1%|
|Poorest||West Wales & The Valleys||16,474||75.8%|
 Comparison with regional blocs
|Area (km²)||Population||GDP (PPP) ($US)||Member
|in millions||per capita|
|Area (km²)||Population||GDP (PPP) ($US)||Political
|in millions||per capita|
|China (PRC) 4||9,596,960||1,306,847,624||10,000,000||7,600||33|
|1 Including data only for full and most active members
People's Republic of China does not include Hong Kong, Macau and
regions administered by the Republic of China (Taiwan).
smallest value among the blocs compared largest value among the blocs comparedDuring 2004. Source: CIA World Factbook 2005, IMF WEO Database
- ^ 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
 See also
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