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European Economic Integration
Transcript of European Economic Integration
1910-1926- The Republic was established
1926-1974- Under a Dictorial Regime
1974- A Democracy was established Entry into the EU Official Member- January 1, 1986 Provisions 1) Eliminate all tariffs on exported goods to the 10 EC member states
2) Join CET (Common External Tariff)
3) Join CAP (Common Agricultural Policy) Econmic Growth GDP grew 3-4% on average
Unemployment cut in half
Inflation dropped from 20% to 3% Increased Trade with EU Members Trade increased from 62.5% to 75.1%
Exports: 4.1% to 15.1%
Import: 7.3% to 16.7%
Removal of High Tariffs
No longer isolated January 1, 1999- Launch of the Euro
Notes and coins introduced in 2002 Economic Decline Begins Deficit early 2005: 6.8% of GDP
Highest in the Euro zone
Euro Stability-pact ceiling: 3%
Reduced to 2.6% in 2007
Reached 6.7% in 2009
GDP growth 2006: 1.3%
Lowest in Europe Current Financial Crisis Began in 2010
Socrates Socialist Party defeated in 2011
April 2011: Third debt-stressed European country to require a bailout
€80 Billion ($114.4 Billion)
Unemployment 2012: Over 13% How did Portugal get into debt? Expensive Western Lifestyle
Excess consumption in the Private Sector
Consumption was financed by banks
Public Debt: 85% of GDP 2010
Averaging 0.7% per year
Lost trust in investors
High level of returns
Low cost producers in Central Europe and Asia France EU's Economic Integration What is Economic Integration? what about the EU? If you don't follow the rules, you get in serious trouble... GREECE... ITALY SPAIN United Kingdom Possible Solutions for the European Crisis What is going on?!
(How Everything started) What is the European Union? The European Economic Community Founded in 1958
Its purpose was to create economic interdependence of nations.
Maintain peace after WWII beginning of the EU The Maastricht treaty It was signed in 1993 forming the current EU
Created a supranational Organization with 27 member states.
Share the same market EEC Common Foreign and Security Policy (CFSP) Created in 1997 by the signature of the Amsterdam Treaty
It establish a unified diplomatic approach when it comes to security matters and commercial issues for the EU. European's Union Current State During the last 4 years the EU has begun to face some difficult challenges when it comes to preserving its unity. Many of its member states are disagreeing in important decisions, causing policy making to be slow and in some cases weak. The current financial crisis of the EU has created fear among political leaders and the private sector of Europe. Important things to know The EU is an IGO
Was founded to prevent war, maintain peace and create a common market for Europe's Nation.
THE EURO ZONE and the EU are not the same. (there are countries who don't belong to the Euro zone) before we continue.... terms to know • GDP: Gross Domestic Product. It is the Market Value of all official final goods of a country after a certain period of time.
• Euro zone: The Euro Zone stands for the European Union’s Common Currency Area. In other words it is the complete territory in which the Euro is used as coin. “An arrangement between different regions marked by the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies” the European Union might sink into a deep economic recession. Many of the member states of the EU, including their major economies such as Germany and the UK, have acquired national debts that go over 50% of their respective GDP European countries are not able to pay the debts they have acquired in the past, placing themselves at the risk of bankruptcy. When the Maastricht treaty was signed some regulations were applied to its member nations. Orderly Fiscal Policies
member states should not acquire a yearly defecit greater than 3% of their GDP.
however nations did not obey them and know they are in trouble 's 'S Role in the game Joined the EU on June 19, 2001
November 22, 2004 their government confesses that they manipulated their fiscal data.
By 2010, Greek had acquired an incredible enormous debt. Bailouts Bailouts EVERYWHERE €110 billion bailout plan... new package of 109 billion euros ... ...130 billion more
After the terrible situation with Greece, things didn’t got better for the Europeans. The tragedy continued with the Italian borrowing costs rising. Later on, Spain announced to the EU that their economy was going down and that its future was uncertain. Greek citizens begun to disagree with the measures applied by the IMF and EU to the country and the bailout packages, increasing the risk of Greece living the euro zone and creating fear among Europe. Spain largest banks requested a bailout and this raised the fears that the Spanish banking system might collapse. All this events, added to many EU member countries’ debts, places the European community at the edge of a peek. Europe's Downfall The entire European Union (including countries of the Euro Zone and countries that did not adopt the Euro) are in a Sovereign Debt Crisis. All European countries owe money, many of them exceeding even 80% of their GDP. States like Greece and Italy are worst than this, Italy having a debt that exceeds 120% of its GDP and Greece having another ones 165% higher than its GDP. However, even if the EU unites all of these countries, each of them has its own perspective and solutions for the current European crisis. Germany German diplomats enforce the idea of a united Europe. In current debates they always seem to lead the discussion promoting ideas of unity and mutual cooperation. They have proposed union endlessly, even to a degree of a full federalist state. It is Europe’s second largest economy, the first one being Germany. However since the government of France has changed recently, also it has their approach to the euro-crisis. France’s president argues that he will not support any idea that will not stimulate Europe’s economic growth. Why will he do this? Well the reason might be that, even if France’s economy and debt are stable, their country’s banks have lent excessively amounts of money to countries like Spain and Italy, and if these countries can’t pay back then they put France in a dangerous position. The country itself is doomed. It is considered the starting point of the European Economic crisis. It is the country with higher risks of leaving the Euro Zone. The country borrowed more that they could spend and tried to solve the problem with more overspending... that’s smart!! -_- The country faces two major problems. First of all are its enormous debts that come from the 1970s. The second problem is that their current economic problem does not receive enough political support since most of the parliament is controlled by strong businesses. Spain was a good boy. At first it was the only country that followed the rule of having its deficit under 3% yearly, but then something went wrong. In 2008 Spain faced an economic crisis causing the country to get an incredibly big debt. The UK never believed in integration, they do not belong to the Euro Zone and strongly believe that too much integration might actually hurt the economy of the European states instead of helping it. European Central Bank The ECB can be considered as the MVP of the current Euro-Crisis. It is independent from all European governments but it in a way it also needs their support. The ECB main position is not to save every single European Country, but as the current president of the entity said: “I will certainly do my best to assist a country when it comes to the edge of bankruptcy.” 1. Establish a common economic organization that will raise funds for the Euro Zone, being considered as one and not as independent countries in need of economic assistance. All member states should follow this organization’s fiscal discipline.
2. Enforce common supervision and regulations within members of the Euro Zone, that way nothing will go unobserved and anomalies can be addressed quicker.
3. Develop a plan which will produce economic growth among the EU nations. “The Debt Problem cannot be solved without growth”. In order to get out of the crisis, one of Europe’s primordial roles is to restore confidence in its banks. If this doesn’t happen, the Euro Zone will keep losing their investors and never get them back again. Perhaps through a banking Union the EU might be able to unite efforts and achieve a financial stability through out all Europe. France’s president proposed the idea of boosting European Economies instead of shrinking them and he believes that in order to make this possible the ECB most play an important role in it. He believes that they must target financial stability and unemployment. For him, this is the only way to save Europe. In order for Europe to create a complete fiscal, monetary and banking Union, national governments must agree and give the power to a central authority. This authority will supervise the efforts of the EU to restore the economy and will do its best in maintaining it stable. However, man countries will not agree to this since they will not give their sovereignty and will always seek their own national interests.