With the motto “United in Diversity”, the EU works on its Europe 2020 growth strategy for the EU to become a smart, sustainable and inclusive economy.
The EU is a unique economic and political partnership between 28 European countries that together cover much of the continent. It was created in the aftermath of the Second World War. The first steps were to foster economic cooperation: the idea being that countries that trade with one another become economically interdependent and so more likely to avoid conflict. The result was the European Economic Community (EEC), created in 1958, and initially increasing economic cooperation between six countries: Belgium, Germany, France, Italy, Luxembourg, and The Netherlands. Since then, a huge single market has been created and continues to develop towards its full potential.
What began as a purely economic union has evolved into an organisation spanning all policy areas, from development aid to environment. A name change from the EEC to the European Union (EU) in 1993 reflected this. The EU is based on the rule of law; everything that it does is founded on treaties, voluntarily and democratically agreed on by all member countries. These binding agreements set out the EU’s goals in its main areas of activity.
It has delivered half a century of peace, stability, prosperity, helped raise living standards and launched a single European currency. Thanks to the abolition of border controls between EU countries, people can travel freely throughout most of the continent. And it’s also become much easier to live and work abroad in Europe. The single or ‘internal’ market is the EU’s main economic engine, enabling most goods, services, money and people to move freely. Another key objective is to develop this huge resource to ensure that Europeans can draw the maximum benefit from it.
“United in diversity”, the motto of the European Union, first came into use in 2000. It signifies how Europeans have come together, in the form of the EU, to work for peace and prosperity, while at the same time being enriched by the continent’s many different cultures, traditions and languages.
One of its main goals is to promote human rights both internally and around the world. Human dignity, freedom, democracy, equality, the rule of law and respect for human rights: these are the core values of the EU. Since the 2009 signing of the Treaty of Lisbon, the EU’s Charter of Fundamental Rights brings all these rights together in a single document. The EU’s institutions are legally bound to uphold them, as are EU governments whenever they apply EU law. As it continues to grow, the EU remains focused on making its governing institutions more transparent and democratic. More powers are being given to the directly elected European Parliament, while national parliaments are being given a greater role, working alongside the European institutions. In turn, European citizens have an ever-increasing number of channels for taking part in the political process.
Europe 2020 is the EU’s ten year growth strategy. It is about more than just overcoming the crisis which continues to afflict many of our economies. It is about addressing the shortcomings of our growth model and creating the conditions for a different type of growth that is smarter, more sustainable and more inclusive.
To render this more tangible, five key targets have been set for the EU to achieve by the end of the decade. These cover employment, education, research and innovation, social inclusion and poverty reduction, and climate / energy. The strategy also includes seven ‘flagship initiatives’ providing a framework through which the EU and national authorities mutually reinforce their efforts in areas supporting the Europe 2020 priorities such as innovation, the digital economy, employment, youth, industrial policy, poverty and resource efficiency.
Operating as a single market, the EU is a major world trading power. EU economic policy seeks to sustain growth by investing in transport, energy and research – while minimising the impact of further economic development on the environment.
The EU’s economy – measured in terms of the goods and services it produces (GDP) – is now bigger than the US’s: EU GDP in 2012: €12,945,402 million.
Internally, the EU has abolished trade barriers, adopted a common currency and is striving toward convergence of living standards. Internationally, the EU aims to bolster Europe’s trade position and its political and economic weight. Because of the great differences in per capita income among member states (from $13,000 to $82,000) and in national attitudes toward issues like inflation, debt, and foreign trade, the EU faces difficulties in devising and enforcing common policies.
Eleven established EU member states, under the auspices of the European Economic and Monetary Union (EMU), introduced the euro as their common currency on 1 January 1999 (Greece did so two years later). Between 2004 and 2007, 12 states acceded to the EU that are, in general, less advanced economically than the other 15 member states. Of the 12 most recent entrants, only Slovenia (1 January 2007), Cyprus and Malta (1 January 2008), Slovakia (1 January 2009), and Estonia (1 January 2011) have adopted the euro; 11 non-Euro member states, other than the UK and Denmark which have formal opt-outs, are required by EU treaties to adopt the common currency upon meeting fiscal and monetary convergence criteria.
Following the 2008-09 global economic crisis, the EU economy saw moderate GDP growth in 2010 and 2011, but a sovereign debt crisis in the euro zone intensified in 2011 and became the bloc’s top economic and political priority. Despite EU/IMF adjustment programs in Greece, Ireland, and Portugal, and consolidation measures in many other EU member states, significant risks to growth remain, including high public debt loads, aging populations, onerous regulations, and fears of debt crisis contagion.
In response, euro-zone leaders in 2011 boosted funding levels for the temporary European Financial Stability Facility (EFSF) to almost $600 billion, and in July 2012 brought the permanent European Stabilization Mechanism (ESM) online, a year earlier than originally planned In addition, 26 of 28 EU member states (all except UK and Czech Republic) have indicated their intent to enact a “fiscal compact” treaty to boost long term budgetary discipline and coordination. In September 2012, the European Central Bank committed to a bond buying program for troubled euro-zone member states that agree to a formal program of fiscal and structural reforms, aiming to reduce their borrowing costs and restore confidence in the euro zone.