The European Union was hit hard by the economic crisis. According to the statistics published by the European Commission, the business investment rate keeps falling in the euro area. The unemployment rate is very high and keeps stable at 12.1% in the Eurozone and 10.9% in the European Union. The Eurozone government debt is about 92.7% of GDP and the forecasts made by the Organization for Economic Cooperation and Development are not that good, predicting just 1% economic growth in 2014.
Besides the economic problems of the European Union, there are many other current issues regarding the European integrity and democratic governance. European Union member countries are at different levels of economic development, thus all EU citizens cannot expect to have the same economic and social rights as in Britain or Germany. At the same time, highly developed countries have to pay more to the EU budget and bear the economic burden. While the citizens of these countries pay higher taxes to support the newly included states of the Eastern bloc, they also fear to lose their jobs as the number of immigrants is constantly increasing.
Despite the financial problems of the EU, it should continue expanding. The goal of the European Union is to build a powerful and consolidated union of states in order to provide economic and political stability in the region. However, there has to be the limit for the EU enlargement, as the excessive number of members will cause instability and have a negative effect on the economic system.
The prospective members of the European Union still face too many challenges, such as macroeconomic imbalances, corruption, low average income and disrespect for human rights. Stefan Fule, the European Commissioner for Enlargement and European Neighborhood Policy, assured that all countries seeking to join the Union will have to adopt strict laws and regulations. However, the European Union should also pay more attention to its own governance and battling to overcome the financial crisis.
However, the European economy has started recovering. Even Portugal, Ireland, Spain and Greece seem to be no PIGS anymore. The sovereign-debt yields fell to 3.9%, enabling Portugal to attract investors for the first time since 2010. In March 2012, Greece had a 44% yield on the 10-year bonds, which now is 7.63%. In January 2014, Spain’s yield for 5-year bonds was 2.38%, and Ireland sold bonds for more than $5.1 billion.
These numbers show that there is an upward trend in the economy stabilization. The European Central Bank put a ceiling on the bonds interest rates in Italy and Spain only after PIGS reformed their economies (that took them about 3 years), thus, one can assume that the European Union is not falling apart. Mario Dragi, the ECB President, promised to keep interest rates low and pledged to do everything possible to reassure investors that the Eurozone has a bright future.
Most businesses have difficulties in troubled economic times. Companies that survived the crisis became more strong and flexible to the new market regulations. The positive trend in the economic growth will bring confidence in the Eurozone currency, thus facilitating international trade and creating better conditions for the development of the business. Although hit hard, the European business managed to overcome the recession. Leaders of the European Union took effective legislative and regulatory measures to stabilize the economy and provide an opportunity for the further growth and development.
Works Cited
Bloomberg. Lessons From Europe’s Long Recession. N.p., 5 Dec. 2013. 29 Jan. 2014. <http://www.bloomberg.com/news/2013-12-04/lessons-from-europe-s-long-recession.html>.
Kanter, James. “E.U. Identifies Problems in Its Members’ Economies.” The New York Times. N.p., 13 Nov. 2013. 29 Jan. 2014. <http://www.nytimes.com/2013/11/14/business/international/eu-presses-countries-to-improve-economies.html?_r=0>.
Matlack, Carol. “Investors Are Getting Hungry for PIGS Debt Again.” Bloomberg Businessweek. N.p., 9 Jan. 2014. 29 Jan. 2014. <http://www.businessweek.com/articles/2014-01-09/investors-are-getting-hungry-for-pigs-debt-again>.
OECD. Euro Area - Economic forecast summary. N.p., n.d. 29 Jan. 2014. <http://www.oecd.org/eco/outlook/euroareaeconomicforecastsummary.htm>.
Weisbrot, Mark. “Economic and Social Policy and the Problems of the Eurozone and European Integration.” The Huffington Post. N.p., 29 Jan. 2014. 29 Jan. 2014. <http://www.huffingtonpost.com/mark-weisbrot/economic-and-social-polic_b_4689620.html>.
