Europe, the European Union, and the Euro are in the news every day. But there’s so much that the articles don’t tell you. Here’s a sampling of often under-appreciated facts about the Europe confederation:
The European Union makes up the world’s largest economy, with a population of about 500 million people and 2011 GDP of roughly $15.3 trillion (compared to the U.S. 2011 GDP of $15.0 trillion).
It’s a political and economic community of twenty-seven countries (Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom).
However, the European Union countries and the Eurozone countries (those using the Euro as their official currency) are not the same.
Only 17 of the 27 European Union members use the Euro as their official currency (Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, Spain). The Euro was first introduced in January 1, 1999 by eleven member states (Greece introduced the Euro two years later). Some of the later entrants to the European Union have adopted the Euro (like Slovakia and Estonia), although others (like Bulgaria and Romania) have not. Yet other member countries (like Denmark and the UK) have formally “opted-out” of the Euro. Sweden has not yet adopted the Euro and may ultimately never do so.
Twenty three countries in total use the Euro as their official currency. Seventeen of those countries are, of course, part of the European Union, while six others are not. Using the Euro, but not in the European Union: Andorra, Kosovo, Monaco, Montenegro, San Marino, and Vatican City.
The EU is the world’s biggest exporter and the second-biggest importer. The U.S. is the #1 destination for European exports. China is the #1 source of imports. (In reverse, the EU is also China’s largest export market.)
The EU is our largest trading partner. According to USA Today, more than 20% of all U.S. exports go to Europe (the U.S. is the #2 source of all goods imported into the EU). So what would be the impact of a European recession on U.S. goods? Hypothetically, using numbers from USA Today, if U.S. exports to Europe dropped by 20%, that would represent a decline of 4% of total U.S. exports. Since exports make up about 15% of U.S. gross domestic product, that would mean a 1% decline in the economy.
Of course, don’t forget many U.S. companies have investments and affiliates in Europe. More than half the sales of American-owned foreign affiliates take place in Europe. The U.S. Trade Representative’s office calculates 7.1 million jobs depend on our transatlantic investments.
Greece, in contrast, accounts for less than 2 percent of the European Union’s GDP. Its economy is roughly the same size as that of Massachusetts.
The European Union is not monolithic, and there is a great disparity of income between the member states. Per capita income is lowest in Bulgaria ($6,016) and highest in Luxembourg ($103,652). However, overall, there is less income disparity in Europe than in the U.S., as measured by the Gini index.