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 €12,581 billion ($18,493.009 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

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

The operation of the EU has an agreed budget of €116 billion for the year 2007, and €862 billion for the period 2007-2013, [cite web |url=http://ec.europa.eu/budget/budget_glance/where_from_en.htm| title=EU budget at a glance|publisher=Europa, EU information website|accessdate=2007-11-06] 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. [http://www.euro-know.org/articles/wew.html]

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 the highest and Bulgaria the lowest. The income of the Bulgarian citizens is not simply the lowest in the European Union, but lower than those of residents of countries outside the EU, such as Croatia. [ [http://www.novinite.com/view_news.php?id=96286 Sofia News Agency, 20 August 2008] ] 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.

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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 one of the largest energy corporations in the world; and Stora Enso, which is the world's largest pulp and paper manufacturer in terms of production capacity, in terms of banking and finance the EU has some of the worlds largest notably HSBC- the worlds largest company- and RBS. 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 [http://epp.eurostat.ec.europa.eu/extraction/retrieve/en/theme1/reg/reg_e3gdp?OutputDir=EJOutputDir_349&user=unknown&clientsessionid=19A1061DE7EB55F2E04BD008A91F53DF.extraction-worker-1&OutputFile=reg_e3gdp.htm&OutputMode=U&NumberOfCells=3868&Language=en&OutputMime=text%2Fhtml&] . 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: [http://ec.europa.eu/comm/eurostat/ramon/nuts/codelist_en.cfm?list=nuts List of NUTS-1, NUTS-2 and NUTS-3 regions] "

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

See also: [http://epp.eurostat.ec.europa.eu/pls/portal/docs/PAGE/PGP_PRD_CAT_PREREL/PGE_CAT_PREREL_YEAR_2008/PGE_CAT_PREREL_YEAR_2008_MONTH_02/1-12022008-EN-AP.PDF List of all NUTS-2 regions with GDP 2005 data]

Comparison with regional blocs

References

*fnb|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.
*cite web|url=http://epp.eurostat.ec.europa.eu/pls/portal/docs/PAGE/PGP_PRD_CAT_PREREL/PGE_CAT_PREREL_YEAR_2005/PGE_CAT_PREREL_YEAR_2005_MONTH_07/2-18072005-EN-AP.PDF|title=Euro-indicators News release|work=June 2005 inflation data|accessmonthday=July 18 |accessyear=2005
*cite web|url=http://epp.eurostat.ec.europa.eu/pls/portal/docs/PAGE/PGP_PRD_CAT_PREREL/PGE_CAT_PREREL_YEAR_2005/PGE_CAT_PREREL_YEAR_2005_MONTH_07/3-01072005-EN-AP.PDF|title=Euro-indicators News release|work=May 2005 unemployment data|accessmonthday=July 18 |accessyear=2005
*cite web|url=http://www.worldbank.org/data/quickreference/quickref.html|title=World Bank|work=GNI data (July 2005)|accessmonthday=August 4 |accessyear=2005

The following links are used for the GDP growth and GDP totals (IMF):
* [http://www.imf.org/external/pubs/ft/weo/2005/02/data/dbcoutm.cfm?SD=2002&ED=2006&R1=1&R2=1&CS=3&SS=2&OS=C&DD=0&OUT=1&C=181-964-935-939-936-944-961-941-946&S=NGDP_RPCH&CMP=0&x=82&y=12 Link to 10 new memberstates Growth Rates]
* [http://www.imf.org/external/pubs/ft/weo/2005/02/data/dbcoutm.cfm?SD=2002&ED=2006&R1=1&R2=1&CS=3&SS=2&OS=C&DD=0&OUT=1&C=122-178-124-136-172-137-132-138-134-182-174-184&S=NGDP_RPCH&CMP=0&x=57&y=17 Link to Growth Rates for the Eurozone]
* [http://www.imf.org/external/pubs/ft/weo/2005/02/data/dbcoutm.cfm?SD=2002&ED=2006&R1=1&R2=1&CS=3&SS=2&OS=C&DD=0&OUT=1&C=423-128-144-112&S=NGDP_RPCH&CMP=0&x=75&y=12 Link to non-Eurozone EU15 countries Growth Rates]

ee also

*Sapir Report