Eurozone - Europe Essay Example

In a researched written by Eduardo Tome stated that a hundred years past, Europe dominated the world based on a small set of colonial empires - Eurozone introduction. Europe was always at the forefront of economic development with the agricultural Revolution of the 18th century and the three Industrial Revolutions of the 20th century since from the renaissance. The pace of economic development was strong since from the Second World War. IT slowed in seventies but went up in the eighties and nineties and stopped in the last two years especially in the Euro zone (See “Economic Policies for the New Millennium: The European Union Case”. ttp: //www4. fe. uc. pt/30years/papers/152. pdf. ). In an article found from Wikipedia, the free encyclopedia stated that attempts to unite the disparate nations of Europe precede the modern nation states which they have occurred repeatedly throughout the history of Europe. Europe was dominated by the Celts and other tribes which were not a single political entity and then conquered and ruled by the Mediterranean centered Roam Empire in two and a half thousand years ago. This early Union was created by the force of one central state.

The Frankish empire of Charlemagne and the Holy Roman Empire united large areas under a loose administration for hundreds of years. The first full customs union was originally known as the European Economic Community and was informally called as the Common Market in the UK) which was established by the Treaty of Rome in 1957 and was implemented in January 1st of 1958. And it was later changed to the European Community which is now known as the “first pillar” of the European Union. The EU has evolved from a trade body into an economic and political partnership.

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The former French president named Valery Giscard d’estaing happened to served as president of the Convention on the Future of Europe at that time suggested to change the name of the European Union to United Europe but it was not approved (See “European Union”. http://en. wikipedia. org/wiki/European_Union#Origins_and_history). In a report written by Jean-Michel Six (London, March 30,2006) stated that European Central Bank (ECB) undertook the second interest rate hike of its current monetary tightening cycle in march 2006 and given its focus on headline rather than core inflation.

In UK, the housing market has so far experienced a soft landing, and foreign trade is set to make a comeback in 2006 as a net contributor to overall CDP growth. Standard & Poor’s expects real GDP growth in the Euro zone to reach 1. 9% in 2006 which was 1. 3 in 2005 and to stabilize at 1. 6% in 2007. On the other hand, the UK economy should grow 2% in 2006 which was 1. 7% in 2005 and 2. 7% in 2007 (See “European Economic Forecast: Entering a New Cycle”. www2. standardand poors. com/…/ArticleTemplate&c=sp-article&acid=1143486118910&newsletter=Y).

Eduardo Tome added that many years past, the European countries have been good respecting the rules about macroeconomic equilibriums but there is a little doubt and strong suspicions that the Stability and Growth Pact because it is very strict which has decisively contributed to the recent poor performance of the Euro zone and this fact was forecasted long ago (See “Economic Policies for the New Millennium: The European Union Case”. http: //www4. fe. uc. pt/30years/papers/152. pdf. ). Jean-Michel Six has added that the European corporate sector overextended itself about as much as that in the U.

S. during the bubble period prior to 2001. The financing gap which is the difference between gross savings and gross capital formation moved up by 2 percentage points of GDP to a peak of 3% at the end of 2000. And on that measure, Euro zone leveraging which occurred via a massive increase in external debt, was comparable with the U. S. both in duration and in extent (See “European Economic Forecast: Entering a New Cycle”. www2. standardand poors. com/…/ArticleTemplate&c=sp-article&acid=1143486118910&newsletter=Y).

In a survey conducted by Economic Survey of the Euro area 2005 (July 12, 2005) showed that economic policy in the euro area pursues the objectives of achieving solid growth, a better performance of labor markets and restoring sound public finances in the context of a single monetary policy which aims at maintaining price stability. On unchanged policies and with population ageing the euro area’s potential output growth is set to decelerate over the next decades and will eventually stabilizes at around one percent per annum by 2020.

The illustration of the following scenario below was taken from Economic Survey of the Euro Area 2005: Executive Summary (http://www. oecd. org/document/27/0, 2340, en_2649_37405_35103963_1_1_1_37405, 00. html). The members of the European Union have transferred to it considerable sovereignty, more than that of any other non-sovereign regional organization. In October 29 of 2004, EU member state heads of government and state signed the treaty establishing a Constitution for Europe. This has been ratified by 13 member states and is presently awaiting ratification by the other states.

The present and future status of the European Union continues to be subject of political controversy with widely differing views both within and between member states. Major issues presently facing the European Union cover its membership, structure, procedures and policies. They include the adoption, abandonment or adjustment of the new constitutional treaty which is the Union’s enlargement to the south and east resolving the Union’s problematic fiscal and democratic accountability, economic viability with the United States, China, and India.

An area of 3,892,685 km2 and has approximately 460 million inhabitants as of December 2004 which is occupied or covered by the European Union’s 25 member states. This Union’s member states combination represent the world’s largest economy by GDP which is the seventh largest territory in the extent of “European” has been a matter of debate. Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands were the six founding members which established the ECSC in July 23 of 1952 and the European Community in March 25 of 1957.

After that, there were nineteen states have joined in the successive waves of enlargement and these are the Denmark, Ireland, United Kingdom, Greece, Portugal, Spain, the territory of the former German Democratic Republic as part of Germany again became part of European Community, Austria, Finland, Sweden, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia (See “European Union”. http://en. wikipedia. org/wiki/European_Union#Origins_and_history).

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