Economy of the European Union

Template:Infobox Economy of the European Union The economy of the European Union combines the economies of 27 member states and is generating an estimated nominal GDP of US$17,6 trillion in 2008 according to the IMF. It accounts for about 31% of the world's total economic output. Fifteen member states adopted a single currency, the Euro, managed by the European Central Bank. The EU economy consists of a single market and is represented as a unified entity in the WTO.

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 15 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. The remaining states are committed to join the Euro through their Treaties of Accession.

Budget

Further information: Budget of the European Union

The EU has an agreed budget of €116 billion for the year 2007, and €862 billion for the period 2007-2013, this represent around 1% of the EU's GDP. By comparison, the UK expenditure for 2004 alone was estimated at about €759 billion and France was estimated at about €801 billion. In 1960, the then "EU" (EEC) budget was 0.03% of GDP. [1]

Economic variation

Below is a table showing, respectively, the GDP (PPP) and the GDP (PPP) 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. Eurostat, based in Luxembourg, is the Official Statistical Office of the European Communities releasing yearly GDP figures for the member states as well as the EU as a whole, which are regularly updated, supporting this way a measure of wealth and a base for the European Union's budgetary and economic policies. Figures are stated in euro. All data for 2007 are projections.

These are the official Eurostat figures, as of 21 April 2007.

File:655px-European Union GDP per capita w text.png

GDP (PPP) per capita 2006
  >$30,000   >$25,000   >$20,000   >$15,000   >$10,000

Member States	GDP (PPP) 2007 millions of euro	GDP (PPP) per capita 2007 euro	Percentage of EU27 average GDP (PPP) per capita
European Union	12,172,536	24,700	100%
1 Germany €	2,340,372	28,300	115%
2 United Kingdom	1,847,105	29,300	119%
3 France €	1,744,444	27,200	110%
4 Italy €	1,500,475	25,200	102%
5 Spain €	1,121,961	25,900	105%
6 Netherlands €	530,564	32,600	132%
7 Poland	525,277	13,500	55%
8 Belgium €	319,867	29,700	120%
9 Sweden	274,499	30,700	126%
10 Austria €	264,472	31,800	129%
11 Greece €	246,671	24,500	100%
12 Romania	208,220	10,000	40%
13 Czech Republic	207,174	20,100	82%
14 Portugal €	190,882	18,300	74%
15 Denmark	171,298	30,900	124%
16 Hungary	166,031	15,800	65%
17 Ireland €	157,070	36,200	147%
18 Finland €	153,595	29,400	120%
19 Slovakia	88,602	16,700	68%
20 Bulgaria	86,500	9,500	38%
21 Lithuania	50,241	14,900	61%
22 Slovenia €	44,040	22,400	89%
23 Latvia	33,630	14,500	61%
24 Luxembourg €	31,376	70,400	285%
25 Estonia	23,919	17,900	72%
26 Cyprus €	17,773	22,700	92%
27 Malta €	7,824	19,100	77%
Candidate countries: (not included in the EU total above)
Croatia	57,948	13,200	54%
Turkey	541,418	7,900	32%
Republic of Macedonia	13,897	7,100	29%

Source:GDP(PPP): EUROSTAT [2]
PERCENTAGES: EUROSTAT([3]).

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).

With the exception of Portugal, all countries 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. (NB: Were the table ordered according to 'GDP per capita' this would perhaps better reflect the strength of an individual economy. But this is not how such tables are commonly structured).

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. The 2007 data are IMF estimates made in April 2007. [4] [5]

Member State sorted by GDP	GDP in billions of US $ (2007)	GDP % of EU (2007)	Annual change  % of GDP	GDP per capita in PPP US $ (2007)	Public Debt % of GDP (2006)	Deficit % of GDP (2006)	Inflation % Annual (2007)	Unemp. % (2006)
European Union [6]	15,183.4	100.0%	2.8	29 342	63.8	-2.6	2.2	7.5
Germany	3,080.6	19.4%	1.8	32,179	66.0	-3.7	2.0	7.8
United Kingdom	2,660.7	16.8%	2.9	36,568	41.6	-3.2	2.3	5.3
France	2,401.4	15.2%	2.0	31,873	65.6	-3.7	1.7	8.3
Italy	1,993.7	12.6%	1.8	31,694	105.8	-3.0	2.1	6.8
Spain	1,359.1	8.6%	3.8	28,445	48.9	-0.3	2.6	7.8
Netherlands	720.9	4.5%	2.9	36,240	55.7	-2.5	1.8	3.2
Sweden	423.6	2.7%	3.3	35,729	51.2	-1.4	1.8	5.5
Belgium	423.5	2.7%	2.2	35,693	95.6	-0.1	1.9	7.8
Poland	364.8	2.3%	6.5	19,600	43.6	-3.0	2.2	10.5
Austria	348.7	2.2%	2.8	37,536	65.2	-1.3	1.6	4.5
Greece	341.8	2.2%	3.8	27,360	95.3	-2.8	3.2	8.3
Denmark	302.6	1.9%	2.5	38,072	42.7	-2.8	2.0	4.7
Ireland	250.2	1.6%	5.0	46,786	29.9	-1.3	2.4	4.5
Finland	225.4	1.4%	3.1	36,324	43.6	-2.1	1.5	7.5
Portugal	211.7	1.3%	1.8	23,464	61.9	-2.9	2.5	7.4
Czech Republic	160.4	1.0%	4.8	24,679	37.4	-3.0	2.9	6.6
Romania	157.6	1.0%	6.5	10,661	21.2	-4.0	4.5	4.5
Hungary	125.0	1.0%	2.8	20,700	57.6	-4.5	6.4	7.9
Slovakia	69.3	0.8%	8.2	19,172	36.9	-2.9	2.4	10.8
Luxembourg	45.8	0.3%	4.6	84,507	7.5	-1.1	2.1	4.6
Slovenia	41.1	0.3%	4.5	25,266	29.4	-1.9	2.7	6.4
Bulgaria	35.8	0.2%	6.0	10,677	24.8	-4.0	5.3	7.8
Lithuania	35.4	0.2%	7.0	16,863	19.7	-2.5	3.5	6.1
Latvia	24.1	0.2%	10.5	17,364	14.4	-0.8	7.3	6.3
Cyprus	19.9	0.1%	3.9	31,053	62.3	-3.5	2.1	4.8
Estonia	19.6	0.2%	9.9	20,114	4.9	-1.8	4.8	4.2
Malta	6.2	0.1%	2.3	21,061	75.0	-5.2	2.4	6.8

Economic growth

The EU's share of Gross world product (GWP) is stable at around one fifth [7]. GDP growth, though strong in the new member states, is being affected by sluggish growth in France, Italy and Portugal.

Estonia and Latvia, also referred to as the Baltic Tigers, have the highest GDP growth rates in the union and one of the highest in the world.

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

GDP (PPP) per capita 2007 showing countries above and below EU-27 average

[8] EU15 GDP growth rates

[9] New member GDP growth rates

Member State % GDP Growth [10] 2005 2006 2007 2008 Austria 2.0 3.3 3.3 2.5 Belgium 1.4 3.0 2.6 1.9 Denmark 3.1 3.5 1.9 1.5 Finland 2.9 5.0 4.3 3.0 France 1.7 2.0 1.9 2.0 Germany 0.8 2.9 2.4 2.0 Greece 3.7 4.3 3.9 3.6 Ireland 5.9 5.7 4.6 3.0 Italy 0.1 1.9 1.7 1.3 Luxembourg 4.0 6.2 5.4 4.2 Netherlands 1.5 3.0 2.6 2.5 Portugal 0.5 1.3 1.8 1.8 Spain 3.6 3.9 3.7 2.7 Sweden 2.9 4.2 3.6 2.8 United Kingdom 1.8 2.8 3.1 2.3

Member State % GDP Growth 2004 2005 2006 2007 Bulgaria 5.7 5.5 5.6 6.1 Cyprus 3.9 3.7 3.5 3.8 Czech Republic 4.2 6.1 6.0 4.9 Estonia 7.8 9.8 9.5 8.7 Hungary 5.2 4.1 4.5 2.4 Latvia 8.6 10.2 11.0 9.6 Lithuania 7.0 7.5 6.8 7.3 Malta -1.5 2.5 1.6 3.0 Poland 5.3 3.4 6.1 6.5 Romania 4.1 8.5 7.7 6.7 Slovakia 5.4 6.1 6.5 8.5 Slovenia 4.2 4.0 5.2 4.3 European Union 2.4 1.8 2.8 2.4 Eurozone 2.1 1.3 2.4 2.0

The ten new member states of Eastern and North 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 11%, 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 EU27 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, Romania 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

Trade

The European Union is the largest exporter in the world ([11]) 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.

Unemployment

Unemployment rate by country in the EU at February 2007

Changes in the unemployment rate from February 2006 until February 2007 in the EU (Red - increasing and Blue - decreasing)

The seasonally adjusted unemployment rate in the European Union in June 2007 was 6.9% compared to 7.9% in all current 27 memberstates in June 2006. The rate varies widely by member state. In comparison the United States had an unemployment rate of 4.5% and Japan a rate of 3.8% measured by Eurostat.

The following table states the current unemployment rate of all Member States for June 2007 with comparisons to June 2006:

Member State % Unemployment June 2006 June 2007 Austria 4.8 4.3 Belgium 8.4 7.2 Denmark 4.2 3.5 Finland 7.8 6.7 France 9.5 8.6 Germany 8.3 8.8 Greece 9.0 8.6 Ireland 4.5 4.0 Italy 6.8 6.1 Luxembourg 4.6 4.9 Netherlands 3.9 3.3 Portugal 7.6 7.9 Spain 8.5 8.0 Sweden 7.2 5.3 United Kingdom 5.4 5.4

Member State % Unemployment Rate June 2006 June 2007 Bulgaria 9.0 7.0 Cyprus 4.8 3.9 Czech Republic 7.1 5.7 Estonia 5.7 5.1 Hungary 7.3 7.7 Latvia 7.0 5.7 Lithuania 5.6 4.7 Malta 7.4 6.4 Poland 13.9 10.2 Romania 7.3 7.3 Slovakia 13.4 10.7 Slovenia 6.1 5.1 European Union 7.9 6.9

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 (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, 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.

Companies

The European Union's member states are the birthplace of many of the world's largest leading multinational companies, and home to its global headquarters. Among these are distinguished companies ranked first in the world within their industry/sector, like Allianz, which is the largest financial service provider in the world by revenue; Airbus, which produces around half of the world's jet airliners; Air France-KLM, which is the largest airline company in the world in terms of total operating revenues; Amorim, which is the world's largest cork-processing and cork producer company; ArcelorMittal, which is the largest steel company in the world; Groupe Danone, which has the world leadership in the dairy products market; InBev, which is the largest beer company in the world; L'Oréal Group, which is the world's largest cosmetics and beauty company; LVMH, which is the world's largest luxury goods conglomerate; Nokia Corporation, which is the world's largest manufacturer of mobile telephones; Royal Dutch Shell, which is the largest energy corporation in the world; and Stora Enso, which is the world's largest pulp and paper manufacturer in terms of production capacity. Many other European companies rank among the world's largest companies in terms of turnover, profit, market share, number of employees or other major indicators. A considerable number of EU-based companies are ranked among the worlds' top-ten within their sector of activity.

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). An extreme example is Finland, which is divided for historical reasons into mainland Finland with 5.3 million inhabitants and Åland, an island with a population of 26,700, or about the population of a small Finnish city.

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. Similar problems can be produced by a large number of tourists visiting the area.

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 fifteen member states: none are in the 12 new member states that joined in May 2004 and January 2007. 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 [12]. This definition, however, is not respected by Eurostat. E.g.: the région of Île-de-France, with 11.6 million inhabitants, is treated as a NUTS-2 region, while the state of Bremen, with only 664,000 inhabitants, is treated as a NUTS-1 region.

See also: List of NUTS-1, NUTS-2 and NUTS-3 regions

Rank	NUTS-1 region	2004 GDP (PPP) per capita in Euros
1	Luxembourg	53,978
2	Brussels-Capital, Belgium	53,381
3	Hamburg, Germany	41,972
4	Greater London, United Kingdom	40,542
5	Île-de-France, France	37,526
6	Bremen, Germany	33,508
7	Åland, Finland	31,909
8	Randstad, Netherlands	30,762
9	Ireland	30,414
10	Bavaria, Germany	29,646

Rank	NUTS-2 region	2004 GDP (PPP) per capita in Euros
Note that Frankfurt (€68,751 per capita) and Paris (€67,980 per capita) are treated as NUTS-3 by Eurostat and are thus not listed here.
1	Inner London, United Kingdom	65,138
2	Luxembourg	53,978
3	Brussels-Capital, Belgium	53,381
4	Hamburg, Germany	41,972
5	Vienna, Austria	38,632
6	Île-de-France, France	37,526
7	Berkshire, Buckinghamshire & Oxfordshire, United Kingdom	37,379
8	Oberbayern (Upper Bavaria), Germany	36,408
9	Stockholm, Sweden	35,621
10	Utrecht, Netherlands	33,905

Economically weakest NUTS-2 regions

The fifteen lowest regions in the ranking in 2004 were all in Bulgaria, Poland and Romania, with the lowest figures recorded in Nord-Est in Romania (24% of the average), followed by Severozapaden, Yuzhen tsentralen and Severen tsentralen in Bulgaria (all 26%). Among the 70 regions below the 75% level, fifteen were in Poland, eight each in Greece and Romania, seven in the Czech Republic, six each in Bulgaria and Hungary, four each in France (all overseas departments), Italy and Portugal, three in Slovakia, one region in Spain, and Estonia, Latvia, Lithuania and Malta.

Rank	NUTS-2 region	2005 GDP (PPP) per capita in Euros	% of the average GDP of EU27 in 2005
1	Nord-Est, Romania	5,430	24
2	Severozapaden, Bulgaria	6,023	27
3	Yuzhen tsentralen, Bulgaria	6,026	27
4	Severen tsentralen, Bulgaria	6,205	28
5	Sud-Vest, Romania	6,293	28
6	Sud, Romania	6,526	29
7	Severoiztochen, Bulgaria	6,874	31
8	Sud-Est, Romania	6,921	31
9	Yugoiztochen, Bulgaria	7,404	33
10	Nord-Vest, Romania	7,542	34
11	Lubelskie, Poland	7,839	35
12	Podkarpackie, Poland	7,927	35
13	Centru, Romania	8,066	36
14	Podlaskie, Poland	8,500	38
15	Swietokrzyskie, Poland	8,586	38

Richest & Poorest NUTS-2 Regions (GDP PPP 2005)

See also: List of all NUTS-2 regions with GDP 2005 data

Member State	Region	GDP per capita
		in Euros	As % of EU-27 average
European Union		22,400	100.0%
Austria		28,852	128.8%
Richest	Vienna	39,774	177.6%
Poorest	Burgenland	19,877	88.7%
Belgium		27,135	121.1%
Richest	Brussels-Capital	53,876	240.5%
Poorest	Hainaut	17,819	79.5%
Bulgaria		7,913	35.3%
Richest	Yugozapaden	11,704	52.2%
Poorest	Severozapaden	6,023	26.9%
Cyprus		20,753	92.6%
Czech Republic		17,156	76.6%
Richest	Prague	35,901	160.3%
Poorest	Central Moravia	13,393	59.8%
Denmark		28,375	126.7%
Richest	Hovedstaden	36,073	161.0%
Poorest	Sjaelland	21,265	94.9%
France		25,077	111.9%
Richest	Ile-de-France	38,666	172.6%
Poorest	French Guiana	11,306	50.5%
Germany		25,797	115.2%
Richest	Hamburg	45,271	202.1%
Poorest	Northeast Brandenburg	16,627	74.2%
Estonia		14,093	62.9%
Finland		25,774	115.1%
Richest	Åland	31,245	139.5%
Poorest	East Finland	19,114	85.3%
Greece		21,589	96.4%
Richest	Attica	29,361	131.1%
Poorest	West Greece	13,235	59.1%
Hungary		14,393	64.3%
Richest	Central Hungary	23,489	104.9%
Poorest	Northern Hungary	9,153	40.9%
Ireland		32,197	143.7%
Richest	Southern and Eastern	35,420	158.1%
Poorest	Border, Midland and Western	23,367	104.3%
Italy		23,474	104.8%
Richest	Province of Bolzano-Bozen	30,613	136.7%
Poorest	Sicily	15,098	67.4%
Latvia		11,180	49.9%
Lithuania		11,914	53.2%
Luxembourg		59,202	264.3%
Malta		17,330	77.4%
Netherlands		29,374	131.0%
Richest	Groningen	36,728	164.0%
Poorest	Flevoland	21,573	96.3%
Poland		11,482	51.3%
Richest	Mazowieckie	18,184	81.2%
Poorest	Lubelskie	7,839	35.0%
Portugal		16,891	75.4%
Richest	Lisbon	23,816	106.3%
Poorest	Norte	13,399	59.8%
Romania		7,933	35.4%
Richest	Bucharest-Ilfov	16,760	74.8%
Poorest	North East Romania	5,430	24.2%
Slovakia		13,563	60.6%
Richest	Bratislava Region	33,124	147.9%
Poorest	Východné Slovensko	9,663	43.1%
Slovenia		19,462	86.9%
Spain		23,069	103.0%
Richest	Madrid	29,997	133.9%
Poorest	Extremadura	15,608	69.7%
Sweden		27,721	123.8%
Richest	Stockholm	38,574	172.2%
Poorest	East Middle Sweden	23,621	105.4%
United Kingdom		26,715	119.3%
Richest	Inner London	67,798	302.7%
Poorest	Cornwall & Isles of Scilly	17,343	77.4%

References

• Template:Fnb 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.
• "Euro-indicators News release" (PDF). June 2005 inflation data. {{cite web}}: Unknown parameter |accessmonthday= ignored (help); Unknown parameter |accessyear= ignored (|access-date= suggested) (help)
• "Euro-indicators News release" (PDF). May 2005 unemployment data. {{cite web}}: Unknown parameter |accessmonthday= ignored (help); Unknown parameter |accessyear= ignored (|access-date= suggested) (help)
• "World Bank". GNI data (July 2005). {{cite web}}: Unknown parameter |accessmonthday= ignored (help); Unknown parameter |accessyear= ignored (|access-date= suggested) (help)

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

See also

• Sapir Report