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The European Union has a large economy, probably slightly larger than that of the United States Of America with a 2005 GDP of 12,865,602 million vs. 11,734,300 million (USD figures) (using nominal US Dollar GDP) according to the International Monetary Fund. Using the purchasing power parity method of computing GDP, the preferred comparative measure of economic output, the EU and the US economies are virtually the same size.[http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29 As the EU has 50% more people than the US, but produces about the same economically, the average EU citizen enjoys a per capita share of domestic product of about USD $28,100, while in the US the per person GDP is over USD $40,000.[http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita] The EU Economy is expected to grow further over the next decade as more countries join the union - especially considering that the new member states are usually poorer than the EU average. Growth is almost assured, and hopes are high that this will lead to the modern dynamic of a united Europe. It is estimated that through 2010 the Eurozone will grow 1.1 per cent annually 1 , which is significantly less than other industrialized nations such as the United States, which has an estimated GDP growth of 3 per cent annually through 2020.[http://www.eia.doe.gov/neic/press/press167.html] 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 signficant challenges facing the EU economy include demographic issues like a low birth rate and aging population; while important strengths include the expected gains earned through enhanced free trade and high growth in newer EU members in particular. The European Union's economic growth has been below that of the United States most years since 1990, while its unemployment rate has generally been higher. Many point out that there are benefits accruing to EU citizens (the "social wage") that aren't visible in traditional economic metrics - like enhanced time off from work and other social benefits. In recent years, the economic performance of several of its key members, including Germany and Italy, is a matter of serious concern to policy makers and a hurdle to overcome on the road to continuing EU integration. ECONOMIC GROWTH The EU's share of Gross World Product (GWP) is falling. GDP growth, though strong in the new member states, is being affected by sluggish growth in France and especially Germany and Italy . The Benelux countries also have low growth. The EU15 is characterised by low growth compared to other industrialised nations such as the United States. In 2005, GDP grew by 1.3% in the eurozone, compared to +2.1% for 2004. Over the whole year 2005, GDP grew by 3.5% in the US (+4.2% in 2004) and by 2.8% in Japan (+2.3% in 2004). {Link without Title} It is important to note that the older, established countries of the EU, such as Italy and Germany, are showing the lowest growth (none in the case of Italy), while the newer EU members, such as Poland, are growing robustly. The ten new member states of Eastern Europe have enjoyed a much higher average percentage growth rate than their West European counterparts. With the exception of Malta not one state has had a GDP growth of less than 4%, putting these nations up with economies 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-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. CURRENCY The official currency of the European Union is the Euro , in use in all documents produced by the EU. The Euro is also the most widely used currency in the EU, 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 - although Sweden also has an effective opt-out by not joining the ERM which would only then cause Sweden to be obliged to convert. 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 or 2010. Polls consistently show that if one were held the euro would be heavily rejected. 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, 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 ) Barrel s 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 s and Border Control s. In the Eurozone , trade is helped by not having any currency differences to deal with amongst most members. 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%. Unemployment also varies significantly ''in'' member states. 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 (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. 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 , Greece and Austria are all also within the top ten. ECONOMIES OF MEMBER STATES per capita of EU 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 , 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 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. 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 km&2) or NUTS-1 Île-de-France (12,011 km&2), whilst other NUTS regions are much smaller, for example NUTS-1 Hamburg (755 km&2) or NUTS-1 Greater London (1,580 km&2). One problem with this data is that in some areas, including Greater London , are subject to a large number of Commuter s 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 ). Top 10: economically strongest NUTS-1 and NUTS-2 regions The 10 NUTS-1 and NUTs-2 regions with the highest '' 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 '' 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 . Richest & Poorest NUTS-2 Regions (GDP 2002 PPP) See also: List of all NUTS-2 regions with GDP 2002 data FOOTNOTES
REFERENCES 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 Link to the 500 largest European Companies |
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