Economics of the European Union

There are twenty eight member nations of the EU – collectively known as EU28

The EU28 includes Belgium (BE), Bulgaria (BG), Croatia (CR), Czech Republic (CZ), Denmark (DK), Germany (DE), Estonia (EE), Ireland (IE), Greece (EL), Spain (ES), France (FR), Italy (IT), Cyprus (CY), Latvia (LV), Lithuania (LT), Luxembourg (LU), Hungary (HU), Malta (MT), the Netherlands (NL), Austria (AT), Poland (PL), Portugal (PT), Romania (RO), Slovenia (SI), Slovakia (SK), Finland (FI), Sweden (SE) and the United Kingdom (UK).

Member nations of the Euro Zone

The Euro Area consists of Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland and Estonia. Latvia joined in 2014 and Lithuania joined in 2015.

Size of the European Union

• The EU accounts for around 30 per cent of the total value of global GDP
• In 2010 – there was a total EU population of 503.6 million (compared to USA pop = 315million)
• Largest population - Germany 81 million, Smallest – Malta 0.4 million, UK – 62 million
• The EU, with 503 million inhabitants, accounts for 7% of the world population

Future Enlargement

• Iceland + Former Yugoslav Republic of Macedonia and Turkey are candidate countries
• EU leaders opened accession talks with Serbia in 2013
• Albania, Bosnia and Herzegovina, Montenegro, and are potential applicants
• Norway and Switzerland are outside of the EU. Norway is a member of the European Economic Area giving access to EU single market but freedom to pursue her own macroeconomic policies

UK and the EU – the current position

• The UK joined the EU in January 1973. It is inside the single market but outside of the single European currency – it has an opt out negotiated as part of the 1993 Maastricht Treaty
• The UK is opposed to further fiscal harmonisation between EU nations but broadly in favour of further enlargement of the single market to bring in more nations from Eastern Europe

Europe is a huge economic region - The EU (1090bn euro) was the largest exporter of goods in 2009, followed by China (860bn) and the United States (760bn). The EU (1 200bn) was also the largest importer of goods in 2009, followed by the United States (1 150bn) and China (720bn).

The development of the EU is a series of stages of economic and political integration between member nations and also an expansion of the size and scope of the single market.

Integration can take different forms: there is deeper integration as we go down the following list

• 1.Preferential Trading Area (PTA) e.g. trade agreements between EU and LDCs
• 2.Free Trade Area (FTA) – breaking down trade barriers within group of countries
• 3.Customs Union (CU) – free trade plus a common external tariff (CET)
• 4.Single Market (SM) – built around the four freedoms
• 5.Monetary Union (MU) – a common currency, one policy rate and central bank
• 6.Fiscal Union (FU) – the deepest form of integration, requires some political union

UK Trade with the European Union

Nearly 55% of UK exports and over half of our imports come from the EU. This figure has increased gradually over the years and one point of contrast is that only 7% of our exports go to the BRIC nations (Brazil, Russia, India and China). Europe is also an importance source of inward investment flows for example money invested in mergers and takeovers, portfolio investment in bonds and property and money flowing into commercial banks.

Overall we run a monthly trade deficit of approximately three billion pounds with the countries inside the Euro Area. This deficit has barely changed over recent years and is a structural feature of our trade patterns. The largest trade deficit is with Germany – Europe's biggest economy and one of the world's largest exports of manufactured products such as household appliances, audio-visual equipment and vehicles.

Research on the UK economy inside the EU

Vox EU (February 2015): Why did Britain join the EU? A new insight from economic history: http://www.voxeu.org/article/britain-s-eu-membersh...