European Monetary Union (Revision Webinar Video)

Here is a video recording of an A-level economics revision webinar on aspects of European Monetary Union.

• Monetary union is a deeper form of integration
• The single European currency, the euro, was introduced in 1999 and came into common circulation in January 2002
• No country has yet left the Euro Area
• As of May 2017, there are nineteen member nations
• Of the 28 EU countries (the UK leaves in 2019), 9 are not part of the single currency including Denmark, Hungary, the Czech Republic and Poland

Key problems facing the Euro Area economy

• High structural unemployment + hysteresis effects
• High levels of government debt + high bond yields for some
• Risks from price deflation
• Persistently low aggregate demand / spare capacity
• Fragile banking sector (non-performing loans)
• Weak capital investment – some diverting to emerging Asia
• Big trade / current account imbalances 
• Political tensions and ongoing refugee crisis
• Declines in subjective wellbeing + rise in poverty

Where next for the Euro Area?

• Politics takes centre stage in 2017 (Austria, Holland, France and Germany all have key elections)
• Euro Area is showing stronger (cyclical) growth and falling unemployment with a reduced risk of deflation
• Is this enough for countries to climb out of the debt crisis?
• Banking systems remain fragile (especially in Italy)
• Eurozone’s periphery is still in deep crisis
• Need for structural economic reforms remains
• Changing centre of global economic gravity is accelerating
• Big risk is that hysteresis effects of collapse in investment, structural unemployment and impact of rising inequalities and socio-economic insecurity will damage Europe’s trend growth and the potential to raise living standards.