European Union (EU)

European Union (EU)

Introduction to EU

  • The European Union (EU) is a political and economic union of 27 member states located in Europe.
  • One of the key objectives is to promote peace, its values and the well-being of its citizens.
  • The EU operates a single market which allows free movement of goods, capital, services, and people between member states.

EU Economic Integration

  • The European Union is an example of an economic and monetary union.
  • Under the Economic and Monetary Union, policies in the EU aim to coordinate economic and fiscal policies across member states.
  • This includes the implementation of a single currency, the euro, which is used by 19 of the 27 EU member states known as the Eurozone.

EU Policies

  • Common Agricultural Policy (CAP): This policy aims to provide farmers with a reasonable standard of living, to safeguard stable food supplies at reasonable prices.
  • Fiscal policy: Fiscal rules have been imposed on member countries to limit their budgetary deficit and national debt, aiming to prevent excessive government deficits or debts.
  • Monetary policy: The European Central Bank controls monetary policy in the Eurozone area, aiming for price stability with an inflation target of below but close to 2 percent.

EU Trade

  • The EU forms part of the world’s largest economic area with extremely high levels of intra-regional trade.
  • The EU promotes global trade liberalisation and has numerous trade agreements with countries and regions around the world.
  • The customs union allows for tariff-free trading within the EU, and the EU negotiates trade deals as a single entity on behalf of its member states.

Impact of EU Membership

  • Economic stability: The EU provides a platform for economic stability and growth, with member states benefiting from free trade, free movement of labour and the absence of exchange rate risk within the Eurozone.
  • Impact on businesses: Businesses operating within the EU benefit from a large integrated market free of trade barriers.
  • Convergence and Disparity: EU policies aim for convergence of economic performance among member states; however, disparities continue to exist, particularly between the more industrialised Western Europe and less developed Eastern Europe.

Understanding these points about the European Union provides a comprehensive insight into this international economic entity, its policies, and its impact on the global economy.