What is the future for European Union?
Introduction
For some, the European Union (EU) is an economic salvation that helps to protect any economic recession, while to others it is an economic disaster which is destroying national sovereignty. Despite the different opinions, it is a fact that European Union is one of the world’s largest economic communities which will have a big impact in the future economy.
The EU is an integration which began in 1951 when the Treaty of Rome was first signed between six European countries. Many other countries joined since then such as United Kingdom, Spain, Austria, etc. Today, the EU has 15 Member States, 11 of which will be in full Economic and Monetary Union, using EURO as a single currency and irrevocably fix their exchange rates together. Their decision was so important because it represents one of the greatest economic experiments in Europe.
Formation of the European Union has been a long process, through a lot of meetings and signing a lot of treaties between countries. However, there are still a lot of problems that the EU is likely to face in the future. These things may include the integration of monetary union, enlargement policy and managing the EU budget which I will discuss in this project.
Discussion
The discussion of the European Monetary Union (EMU) has been extremely topical. There are a lot of people or pressure groups who agree with the integration due to several advantages. Their arguments may include there will be an increase in trade through the elimination of exchange rate fluctuations; reduce cost of production because commission is no longer needed to buy foreign currencies. As for the political agenda, the European Monetary Union will be the first leap towards a single European state, i.e. a central bank, a common legislation, etc. However, Eurosceptics were concerned that there is the potential to lose monetary policy as a macroeconomic tool. They believe that one single interest rate cannot fit all the countries. International Monetary Fund (IMF) agreed as they estimated the growth rate for Ireland is 7.5% while it is 3% for Germany. This shows that the gap between members of their GDP growth rates is significant. For a single European state to work successfully, the member countries must have a similar economic system. This is the reason why the convergence criteria were established. It is a common set of economic objectives a country must reach before joining the EMU. However, this does not mean there will be economic equality. An example of this can be shown by the data on GDP in table 1. We can see from table 1 that Greece and Portugal only has a third of income in terms of GDP per capita compared to some of the richest member like Luxembourg.
