Economy of the European Union

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The European Union has a large economy, greater than that of the United States of America with a 2005 GDP of 12,865,602 million vs. 11,734,300 million (USD figures) according to the International Monetary Fund. [1] 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, and hence the expected fast GDP growth will help achieve the dynamic of the united Europe. It is estimated that the eurozone will grow 1.1 per cent annually1, comparable to other industrialized nations such as the United States, who’s estimated GDP growth is 1.11 per cent for 2.

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 European Union's economic growth has been below that of the United States most years since 1990, and the economic performance of several of its key members, including Germany and Italy, is a matter of serious concern to policy makers.

1 Economic Growth
2 Currency
3 Energy resources
4 Trade
5 Unemployment
6 Industries
- 6.1 Agriculture
- 6.2 Tourism
7 Economies of member states
8 Regional variation
9 Footnotes
10 References

Economic Growth

Economy of the European Union
Currency	1 Euro (€) = 100 cents
Other Currencies in Member States	1 Cyprus Pound = 100 cents 1 Czech koruna = 100 haleru 1 Danish krone = 100 øre 1 Kroon = 100 sent 1 Forint = 100 fillér 1 Lat = 100 santims 1 Litas = 100 cents 1 Maltese Lira = 100 cents 1 Zloty = 100 groszy 1 Krona = 100 öre 1 Slovak koruna = 100 halierov 1 tolar = 100 stotins 1 Pound = 100 pence (Not all currencies are legal tender in all of the EU)
Statistics
GDP Ranking (2005)	2nd
GDP (2005)	$12 329.110 trillion
GDP growth rate (2005)	1,5% (Second Quarter of 2005 - 0.3%) 1
GDP per Capita (2005)	$26,900
GDP by sector (2004)	agriculture (2.3%), industry (28.3%), services (69.4%)
Inflation rate (2005)	2.1%
Pop below poverty line	17%
Labour force	211.1 million
Labour force by occupation (2000)	agriculture (4.3%), industry (29%), services )66.8%)
Unemployment rate (2004)	9.1%
Main Industries	Among the world's largest and most technologically advanced industries, including iron and steel, aluminium, petroleum, coal, cement, chemicals, pharmaceuticals, automobiles, aircraft, railway equipment, shipbuilding, electrical power equipment, machine tools, electronics, telecommunications equipment, fishing, food processing, furniture, paper, textiles and clothing, tourism
Sources: [2] [3] [4]
Trading Partners
Imports (2005)	€1 035 Billion
Main Partners (2001)	Japan, Switzerland, United States
Exports (2005)	€970.6 Billion - #1 in world
Main Partners (2001)	Japan, Switzerland, United States
Public Finances
Public Debt (2004)	€6 509.8 Billion - 63.8% of GDP
Public Deficit (2004)	€270.2 Billion
External Debt (2001)
Revenues (2003)
Expenses (2004)	€2 134.7 Billion
Economic Aid

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.

**IMF EU15 GDP Growth Rates**
Country	% GDP Growth
Country	2004	2005 (est.)
Austria	2.4	1.9
Belgium	2.7	1.2
Denmark	2.4	2.2
Finland	2.8	1.8
France	2	1.5
Germany	1.6	1.8
Greece	4.2	3.2
Ireland	5.5	5.0
Italy	1.2	0
Luxembourg	4.4	3.1
Netherlands	1.7	0.7
Portugal	1.0	0.5
Spain	3.1	3.2
Sweden	3.6	2.6
United Kingdom	3.2	1.9

The EU15 is characterised by low growth comparative to other industrialised nations such as the US (Growth at 4.2% 2004). However it is in line with other G7 nations, with Canada (2.9% 2004) and Japan (2.7% 2004).

**IMF GDP Growth Figures for 10 new EU Memberstates**
Country	% GDP Growth
Country	2004	2005 (est.)
Cyprus	3.7	3.8
Czech Republic	4.4	4.1
Estonia	7.8	7.0
Hungary	4.2	3.4
Latvia	8.5	7.8
Lithuania	6.7	6.8
Malta	1.0	1.5
Poland	5.4	3.0
Slovakia	5.5	5.0
Slovenia	4.6	3.9

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 most widely used currency in the European Union is the euro, 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.

The official currency, in use in all documents produced by the European Union, is the euro.

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) barrels 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 exporter in the world ([5]) and the second largest importer. Internal trade between the member states is aided by the removal of barriers to trade such as tarrifs and border controls. 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 Éire 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 and Austria are all also within the top ten.

Economies of member states

The GNI 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 country 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	GDP in billions of $ (USD) (real exchange rates) (2004)	GDP % of EU (2004)	GDP per capita in PPP $ (USD) (2005)	Public Debt % of GDP	Deficit % of GDP	Inflation % Annual	Unemp. %
European Union	12 690.6	100.0%	26 900	63.8	-2.6	2.0	8.8
Germany	2 714.4	21.4%	28 988	66.0	-3.7	1.8	9.6
United Kingdom	2 140.9	16.9%	28 938	41.6	-3.2	2.0	4.6
France	2 002.6	15.8%	27 738	65.6	-3.7	1.8	9.8
Italy	1 672.3	13.2%	27 984	105.8	-3.0	2.2	7.8
Spain	991.4	7.8%	23 627	48.9	-0.3	3.2	9.9
Netherlands	577.3	4.5%	29 332	55.7	-2.5	1.5	5.0
Belgium	349.8	2.8%	29 707	95.6	-0.1	2.7	8.1
Sweden	346.4	2.7%	28 205	51.2	-1.4	0.8	6.3
Austria	290.1	2.3%	31 254	65.2	-1.3	2.0	4.6
Denmark	243.0	1.9%	33 089	42.7	-2.8	1.7	4.9
Poland	241.8	1.9%	12 452	43.6	-4.8	1.4	17.8
Greece	203.4	1.6%	22 000	110.5	-6.1	3.2	10.2
Finland	186.6	1.5%	29 305	43.6	-2.1	1.0	8.6
Ireland	183.6	1.4%	37 663	29.9	-1.3	1.9	4.2
Portugal	168.3	1.3%	18 503	61.9	-2.9	0.6	7.2
Czech Republic	107.0	0.8%	18 370	37.4	-3.0	1.3	8.1
Hungary	99.7	0.8%	15 546	57.6	-4.5	3.7	6.3
Slovakia	41.1	0.3%	15 066	43.6	-3.3	2.5	15.5
Slovenia	32.2	0.3%	20 306	29.4	-1.9	1.7	5.9
Luxembourg	31.1	0.2%	61 220	7.5	-1.1	3.2	4.7
Lithuania	22.3	0.2%	12 610	19.7	-2.5	2.0	8.1
Cyprus	15.4	0.1%	22 330	62.3	-3.5	1.5	5.1
Latvia	13.6	0.1%	11 850	14.4	-0.8	6.6	9.1
Estonia	10.8	0.1%	13 190	4.9	-1.8	4.6	7.9
Malta	5.4	0.04%	18 720	75.0	-5.2	2.1	6.8

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, 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 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 existing member states, before the 10 new member states 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 [6]. 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	2002 GDP (PPP) per capita in Euros
1	Brussels-Capital, Belgium	49,645
2	Luxembourg	45,026
3	Greater London, United Kingdom	40,068
4	Hamburg, Germany	39,766
5	Île-de-France (Paris), France	37,267
6	Åland, Finland	32,795
7	Bremen, Germany	31,672
8	West-Nederland (Randstad), Netherlands	28,705
9	Nord-Ovest (Milan, Turin, Genoa), Italy	28,488
10	Hesse (Frankfurt), Germany	28,382
Rank	NUTS-2 region	2002 GDP (PPP) per capita in Euros
1	Inner London, United Kingdom	66,761
2	Brussels-Capital, Belgium	49,645
3	Luxembourg	45,026
4	Hamburg, Germany	39,766
5	Île-de-France, France	37,267
6	Vienna, Austria	36,603
7	Berkshire, Buckinghamshire & Oxfordshire, United Kingdom	34,251
8	Bozen-Bolzano, Italy	33,783
9	Stockholm, Sweden	33,488
10	Oberbayern, Germany	33,454

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	GDP per Capita in Euros
1	Lubelskie, Poland	6,764
2	Podkarpackie, Poland	6,891
3	Warminsko-Mazurskie, Poland	7,217
4	Podlaskie, Poland	7,435
5	Swietokrzyskie, Poland	7,557
6	Heves, Nógrád & Borsod-Abaúj-Zemplén, Hungary	7,902
7	Opolskie, Poland	7,917
8	Hajdú-Bihar, Jász-Nagykun-Szolnok & Szabolcs-Szatmár-Bereg, Hungary	7,990
9	Prešovský kraj & Košický kraj, Slovakia	8,200
10	Latvia	8,249

Richest & Poorest NUTS-2 Regions (GDP 2002 PPP)

Country	Region	GDP per capita
Country	Region	in Euros	As % of EU average
European Union		21,170	100.0%
Austria		25,568	120.8%
Richest	Vienna	36,603	172.9%
Poorest	Burgenland	17,244	81.5%
Belgium		24,717	116.8%
Richest	Brussels-Capital	49,645	234.5%
Poorest	Hainaut	15,862	74.9%
Cyprus		17,558	82.9%
Czech Republic		14,318	67.6%
Richest	Prague	32,357	152.8%
Poorest	Moravian-Silesian Region	11,098	52.4%
Denmark		25,936	122.5%
France		23,915	113.0%
Richest	Île-de-France	37,267	176.0%
Poorest	French Guiana	12,136	57.3%
Germany		23,012	108.7%
Richest	Hamburg	39,766	187.8%
Poorest	Dessau	14,085	66.5%
Estonia		9,871	46.6%
Finland		24,090	113.8%
Richest	Åland	32,795	154.9%
Poorest	East Finland	17,329	81.9%
Greece		16,425	77.6%
Richest	Central Greece	23,045	108.9%
Poorest	West Greece	12,339	58.3%
Hungary		12,402	58.6%
Richest	Budapest & Pest	20,329	96.0%
Poorest	Heves, Nógrád & Borsod-Abaúj-Zemplén	7,902	37.3%
Ireland		28,089	132.7%
Richest	Southern and Eastern	31,232	147.5%
Poorest	Border, Midland and Western	19,374	91.5%
Italy		23,083	109.0%
Richest	South Tyrol	33,783	159.6%
Poorest	Calabria	14,336	67.7%
Latvia		8,249	39.0%
Lithuania		8,977	42.4%
Luxembourg		45,026	212.7%
Malta		15,499	73.2%
Netherlands		25,847	122.1%
Richest	Utrecht	32,710	154.4%
Poorest	Flevoland	19,133	90.4%
Poland		9,664	45.6%
Richest	Mazowieckie	14,718	69.5%
Poorest	Lubelskie	6,764	32.0%
Portugal		16,248	76.7%
Richest	Lisbon	23,665	111.8%
Poorest	Norte	13,017	61.5%
Slovakia		10,857	51.3%
Richest	Bratislava region	25,351	119.7%
Poorest	Prešovský kraj & Košický kraj	8,200	38.7%
Slovenia		15,941	75.3%
Spain		20,025	94.6%
Richest	Madrid	26,822	126.7%
Poorest	Andalucía	15,055	71.1%
Sweden		24,304	114.8%
Richest	Stockholm	33,488	158.2%
Poorest	Gävleborg, Dalarna, & Värmland Counties	20,735	97.9%
United Kingdom		24,945	117.8%
Richest	Inner London	66,761	315.4%
Poorest	Highlands and Islands	16,226	76.6%

Footnotes

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.