In 1957 The Treaty of Rome came into existence it declared a common European market as a European objective with the aim of increasing economic prosperity and contributing to "an ever closer union among the peoples of Europe".

In 1957 The Treaty of Rome came into existence it declared a common European market as a European objective with the aim of increasing economic prosperity and contributing to "an ever closer union among the peoples of Europe". It established the European Economic Community (EEC). The goal of the EEC was to reduce trade barriers, streamline economic policies, coordinate transportation and agriculture policies, remove measures restricting free competition, and promote the mobility of labour and capital among member nations. It was very successful, but just as with the ECSC, it served more of a peacemaking role between the European nations than an economic role. At this time, the monetary exchange rate between countries was controlled by the , which connected currencies to the U.S. dollar, allowing for only a one-point fluctuation around designated values. This was referred to as the "pegged rate" and was based partly on the gold backing of the dollar. This system worked well for 20 years, helping to stabilize exchange rates and restore economic growth in the post-war period. By 1960, however, the system began to fail, and exchange-rate agreements became the prevalent topic among European political and economic leaders.

By December 1969, Luxembourg's Prime Minister, Pierre Werner, was asked to write an EC (European Community) report covering the need for a complete monetary union among the European economies. The Werner Report came out in 1970 and specifically brought up the idea of a single European currency as part of a cooperative monetary effort. The report was the first to use the term Economic and Monetary Union.

The next move toward a unified European economy came with the 1987 . This act called for the systematic removal of barriers and restrictions that hampered trade between European countries. As a result, border checks, tariffs, , labour restrictions and other barriers to free trade were dismantled.

The Single European Act (1986) and the Treaty on European Union (1992) have built on this, introducing an Economic and Monetary Union (EMU) and laying the foundations for a single currency.

In 1992 the Maastricht treaty was created as an addition to the Treaty of Rome

This initiated the idea of a single European currency to ‘ensure more equal trade, common citizenship, common foreign and security policy, a more effective European Parliament, and a common labour policy that offers the EU an opportunity to become a political and economic world superpower.’ As an entity the EU economy is larger and wealthier than that of the United States. The Maastricht treaty also raised the concept of a monetary and economic union (EMU) the third stage of EMU began on 1 January 1999, when the exchange rates of the participating currencies were irrevocably set.

Euro area Member States began implementing a common monetary policy, the euro was introduced as a legal currency and the 11 currencies of the participating Member States became subdivisions of the euro. Greece joined on 1 January 2001 and so 12 Member States introduced the new euro banknotes and coins at the beginning of this year. This decision was motivated partly by politics and partly by hoped-for economic benefits from the creation of a single, integrated European economy. These benefits included currency stability and low Inflation, backed by an independent European Central Bank (a particular boon for countries with poor inflation records, such as Italy and Spain, but less so for traditionally low-inflation Germany). Furthermore, European businesses and individuals stood to save from handling one currency rather than many. Comparing prices and wages across the euro-zone became easier, increasing by making it easier for companies to sell throughout the euro-zone and for consumers to shop around.

The successful development of the euro is central to the realisation of a Europe in which people, services, capital and goods can move freely. This is history in the making. It is the largest monetary changeover the world has ever seen.

Forming the single currency also involved big risks, however. Euro members gave up both the right to set their own rates and the option of moving exchange rates against each other. This loss of flexibility could prove costly if their economies do not behave as one and cannot easily adjust in other ways. How well the euro-zone functions will depend on how closely it resembles what economists call an currency area. When the euro economies are not growing in unison, a common risks being too loose for some and too tight for others. If so, there may need to be large transfers of funds from regions doing well to those doing badly.

Economically, the euro is meant to , bolstering cross-border mergers, improving price transparency and eliminating exchange-rate risk. Enthusiasts also hope it will be a rival to the hegemonic dollar. The countries joining the EU in 2004 as soon as they can. The fledgling currency dropped in value in the first years after its introduction, due largely to . In mid-2001 it began to against the dollar (probably due to America's large and sustained current-account deficit), and in May 2003 the currency re-attained its 1999 launch value’

EU-15: A Major Partner for the United States

European integration was launched ...

This is a preview of the whole essay

EU-15: A Major Partner for the United States

European integration was launched after World War II with the active support of the United States, and the Atlantic partnership has remained firm ever since. As US Secretary of State Colin Powell noted in 2001, "The European Union's principled response to the September 11th attacks and to our call for a worldwide effort against terrorism is just the latest demonstration of the fact that a strong united Europe is good, indeed essential, for the United States, for Europe, and for the world. Our common objective is security for our peoples. Let no one doubt the will and the power of our free societies to defend the security of our citizens, even as we safeguard our democratic values."

The United States and Europe are economically interdependent. Some 40 percent of US investment abroad goes to the EU, as do some 20 percent of US exports, making the EU one of the top two markets for the US. The EU-15 is the source of some 50 percent of foreign investment in the US. Up to 3 million highly paid jobs in the US are due to EU investment.

The EU and World Affairs

As one of the world's largest trading powers, and as a leading economic partner for most countries, the EU is a major player on the world scene. Its scope for action extends increasingly beyond trade and economic questions. More than 130 countries maintain diplomatic relations with the EU, and the EU has over 100 delegations around the world.

The EU enjoys a close relationship with the countries of Central and Eastern Europe (so-called CEECs). The EU is spending almost $9 billion over five years to help prepare nine CEECs to prepare for EU membership. Since their independence in 1989, the EU has concluded trade and cooperation accords with most CEECs and has been at the forefront of the international effort to assist them in the process of economic and political reform.

The EU is also strengthening its links with the Mediterranean countries, which will receive some $6 billion in EU assistance over the next five years.

The EU maintains special trade and aid relationships with many developing countries. Under the Cotonou (formerly Lomé) Convention, virtually all products originating from 77 ACP (African, Caribbean and Pacific) countries enjoy tariff-free access to the EU single market, as well as a stable export earnings program (STABEX) and considerable financial aid.

The Euro Zone - Unemployment

Unemployment rates (%) in June and July 2003 in ascending order

Euro-zone unemployment stood at 8.9% in July 2003. It was 8.4% in July 2002. The EU15 unemployment rate was 8.1% in July 2003, compared to 8.0% in June3. It was 7.7% in July 2002. In July 2003, the lowest rates were registered in Luxembourg (3.7% in June), the Netherlands (4.2% in June), Austria (4.5%) and Ireland (4.7%). Spain’s 11.4% remained the EU’s highest rate. Among the twelve Member States for which data are available for the most recent two months, all recorded an increase in their unemployment rate in the last twelve months. The Netherlands (2.8% in June 2002 to 4.2% in June 2003), Portugal (5.0% to 6.9%) and Luxembourg (2.8% in June 2002 to 3.7% in June 2003), recorded the most important relative increases.

In July 2003 compared to July 2002, the unemployment rate for males in the euro-zone grew from 7.3% to 7.8%, and the female unemployment rate rose from 9.9% to 10.3%. In the EU15 the unemployment rate for males grew from 7.0% in July 2002 to 7.3% in July 2003. Over the same period the female rate increased from 8.7% to 9.0%.

In July 2003, the unemployment rate for under-25s was 16.9% in the euro-zone and 15.7% in the EU15, compared to 16.3% and 15.1% respectively in July 2002. The rate ranged from 7.5% in Austria to 22.9% in Spain. The general US unemployment rate was 6.2% and the Japanese rate was 5.3%.

The Eurozone – Inflation Rates

The annual rate measures the price change between the current month and the same month of the previous year. This measure is responsive to recent changes in price levels but can be influenced by one-off effects in either month. Nowadays To overcome this volatility the average Harmonized Indices of Consumer Prices (HICPs) is used this measure is less sensitive to transient changes in prices.

Inflation is relatively high in Spain, Portugal and Italy at 2.9 and is expectedly low for Germany at 0.8. The U.K. has is slightly changed at 1.4 as is the eurozone average of 1.9.

THE EUROZONE - ECONOMIC GROWTH

Balance of payments euro-indicators for the euro-zone4

(EUR billions)

Comparisons of the Eurozone with the UK

The debate over whether Britain should join the single currency is a heated one. Speaking in general terms it appears that the single currency has brought great benefits to those countries who were less developed such as Spain or Greece but had a negative effect on those that were flourishing such as Germany (currently branded as ‘the sick man of Europe’) and France. Five economic tests were announced by Gordon brown to be the determining factors as to whether Britain will join or not however they have been delayed and the process is under much scrutiny. I personally think it would be a mistake to not join as Britain would be sidelined from the rest of Europe and suffer because it.

Higher levels of employment reflect a healthier economy. It suggests the economy is produced to its ability and on the PPF curve. It means there is less stress and health related issues and there is a sense of general stability. The UK is renowned in Europe for is low record of unemployment and it is evident from the figures that with regards to this factor the UK has outperformed the Eurozone. As I mentioned above the numbers unemployed in the eurozone are rising steadily which could be an indication of something relatively serious and with the entry of many eastern European countries soon it is likely to rise even higher. However the British labour market is structured differently to many European economies consisting mainly of services industries not agriculture therefore it may have a positive effect on the number unemployed giving more scope for potential job seekers.

Inflation levels are extremely important in any economy, for the U.K. the level is fairly low and there is little risk of the currency rapidly losing value. The eurozone is higher at 1.9 It does show that despite to contrary believe goods of the eurozone are not cheaper but even more expensive than those in the UK which is working to the uk’s advantage however entry into the euro ought to lower the inflation level even lower as it would facilitate trade with other European countries.

Not being a euro member means higher costs for Europeans wishing to purchase goods from the UK. This means as has been demonstrated for a while that the U.K. will continue to depend heavily on imports and now have even less exports being bought. The b.o.p deficit is higher for the UK and I question how accurate that figure of 2.76 that I have acquired is. Obviously the European countries are likely to almost solely trade with each other as it is easier with no tariffs, quotas or extra costs being imposed. Britain will be heavily relying on the US now for the buying the bulk of its exports.

Finally there is growth this is the mot far reaching of the macro economic indicators as it has an effect on everything else for example employment. Both economies have experienced the same change in growth yet the levels are different Britain has an average of about 2% while the eurozone has a volatile trend ranging from –0.5% to 3%. Even though British growth is good it is still average and good potentially grow a lot more, it has under performed according to Mr. Browns economic forecasts of 3 – 3.5% this year. Some nations within the Eurozone such as Ireland and Greece have experienced tremendous growth but others such as Germany and Portugal have pulled down the average because they are slowly slipping into recession.

The Labour government announced on June 9th, 2003 (to the relief of many Europeans) that four of five key economic tests have not yet been passed, making a referendum on the issue unlikely before 2005. The enthusiasm of British business may be waning. (Ironically, Germany, which insisted on tough rules for euro membership, might itself fail Britain's five tests.)

In conclusion economically there does not appear to be any need to join the single currency for now. What has been stated public ally is that Mr. Blair is pro- Euro and Mr. Brown anti- how honest these opinions are we will never know. But by studying these statistics I have concluded that politically it is extremely desirable and wise to join the Euro but economically it appears that the sterling pound is strong enough to perform individually against the Euro and so long as it continues to receive support from the dollar there ought not be a problem.

Poland – A transitional Economy

After years of negotiations, ten new countries were invited in December 2002 to Join the European Union in 2004: Poland, Hungary, the Czech Republic, Slovenia, Slovakia, Malta, Cyprus, Estonia, Latvia and Lithuania. Romania and Bulgaria could follow a few years later. Turkey wants to join too, but the EU—concerned among other things about Turkey's human rights record- has promised only a review of Turkey's application in 2004.

Enlargement raises lots of thorny issues, including how soon new members should join the euro, migration, agriculture and leaky eastern borders. Expansion also highlights the need to restructure the EU itself, which was partly addressed by the Treaty of Nice in 2000 and is at the centre of the EU's constitutional convention begun in February 2002. The cost of enlargement worries current EU members as well. Of these transitional economies I would like to explore the role Poland will play.

Poland is by far the biggest of the countries joining the European Union next year. But it must also do most to get into shape. Poland is in a category of its own. With almost 40m people, it accounts for roughly half the population and half the GDP of all ten incoming countries. The enthusiasm is high as 77% of the 59% who voted said yes however there is very little for the struggling, unpopular, left-wing government of Leszek Miller. It has been distracted and incapacitated by scandals. Poland’s’ Economic policy was the centre of a long confrontation between Mr Miller's economics minister, Jerzy Hausner, and his finance minister, Grzegorz Kolodko, until Kolodko resigned but now Hausner is faced with the task of finding ways of stimulating an economy, hit by slack demand from western Europe and falling investment, without aggravating a budget deficit which approached 7% of GDP last year. The business cycle is however on the up: the economy may grow by about 3% this year, against the 1.3% achieved last year. But Poland's early entry into the euro zone, which would require a budget deficit of below 3% of GDP, seems less and less likely. Most analysts now expect it in 2009-10 at the earliest, rather than in 2007, as the Polish central bank would prefer.

The lack of vision in domestic politics and the fragile state of the economy mean that Poland will probably enter the EU looking mainly for short-term gains, preferably bankable ones, from any negotiation. Once in the EU, Poland will want to maximise the money it gets from the EU budget, mainly through farm subsidies and through the “structural funds” allocated to poorer countries and regions. It will also want to resist any new regimes and rules that impose higher costs or heavier burdens of regulation on business or government in areas such as the environment, labour, taxation, competition and state aids. Poland thinks it has enough on its plate complying with the existing EU rulebook, some parts of which it will need another 12 years to implement. The main issues are a stuttering economy, high unemployment, hints of corruption and accession to the EU.: Polish farmers are angry at the EU's reluctance to extend its absurdly generous farm subsidies to heavily agricultural Poland. They are also caught between national pride, pro-American feelings and a perceived need to toe the EU's foreign-policy line. The economy has started to recover and economic growth will strengthen in both 2003 and 2004. Inflation will rise slightly in the second half of 2003 and in 2004. The current-account deficit is forecast at 2.8% of GDP in 2003 and 3% of GDP in 2004.

Poland has a higher rate of inflation than the euro zone this is due to the weakness of the polish currency in relation to its trading partners making their exports more expensive there causing domestic prices to rise and incurring inflation. After the initial entry inflation will continue to rise for Poland as it would for any economy moving towards a free market structure but in the long run perhaps after experiencing a wage price spiral the level will gradually fall and become stable acting as a great benefit for the poles.

The growth is much higher simply because it is a developing economy this too in the long run will slow down and stabilise but joining the eurozone will help it rise as the labour markets will become more flexible and standard of living improve.

The unemployment figures are much greater because of the lack of labour available. The main industry is agriculture and because of their lack of demand from their trading partners in Eastern Europe their exports will have suffered. As Spain, who has suffered for many years will high unemployment despite still having the worst record in the EU, has seen the employment figures ought to dramatically increase because of the new notion of mobility of labour across Europe.

The current account deficit I s much higher but the forthcoming entry will have the most dramatic effect on this as changes in trade will be encouraged. However as we have seen with the US and to an extent the UK having a deficit does not necessarily mean a suffering economy.

In conclusion Poland’s entry to the EU and adopting the euro, unlike Britain, can be nothing but positive and ought to bring some hope to a politically ravaged country. The extension to Eastern Europe is long due and appreciated by people all over.