The global financial crisis has caused a one-off reduction of income in all major economies. At present, the global economy is weak and a double-dip recession cannot be excluded. In Europe this crisis is financial, economic and social. But it is also a crisis of confidence. The roots of the crisis are well-known: Europe has not met the challenges of competitiveness; some Member States have lived beyond their means; imbalances between EU Member States have grown, particularly in the euro area. The deterioration in public finances has been a consequence of the global financial crisis and the related reduction of income but also, to some extent, the result of policies during the pre-crisis period. Of course, not all economies were affected in the same way. Some were better prepared for the shock or had structures that allowed them to resist with less cost. Therefore the analysis of national performances must be carried out also at the sectoral level to understand how labour productivity trends affected competitiveness by country. More recently new risks for the European economy have emerged. Sovereign debt concerns and uncertainty about the implementation of policy measures to combat the deterioration of government budgets have affected business and consumer confidence. The resulting fiscal consolidation efforts in some Member states will weigh on domestic demand together with a slowdown of external demand causing a subdued outlook for the EU economy. The European sovereign debt crisis has not only put into question the role and viability of states but also achievements in European political and economic integration over many decades. How could it have happened and what happens next? In this article main characteristics of European economic slowdown and prospects for the near future are analysed. The new framework for economic governance recently adopted by the European Council is described as the implementation of these new rules should enhance the EU integration and offers the greatest hope for a future recovery and a greater resilience against future shocks. Finally the envisaged impact of EU future developments on neighbouring countries such as Russia is presented. In particular on the energy sector, the impact of the financial crisis is likely to continue well into the future as energy demand is significantly reduced and investment in energy sector is – by this and other related causes – visibly reduced. An evaluation of these trends through the international trade flows between Russia and EU is performed.

The European Union in the Crisis: What Next? / Bardazzi R.; Grassini M.. - In: ÈKO. - ISSN 0131-7652. - STAMPA. - 41:(2011), pp. 63-81.

The European Union in the Crisis: What Next?

BARDAZZI, ROSSELLA;GRASSINI, MAURIZIO
2011

Abstract

The global financial crisis has caused a one-off reduction of income in all major economies. At present, the global economy is weak and a double-dip recession cannot be excluded. In Europe this crisis is financial, economic and social. But it is also a crisis of confidence. The roots of the crisis are well-known: Europe has not met the challenges of competitiveness; some Member States have lived beyond their means; imbalances between EU Member States have grown, particularly in the euro area. The deterioration in public finances has been a consequence of the global financial crisis and the related reduction of income but also, to some extent, the result of policies during the pre-crisis period. Of course, not all economies were affected in the same way. Some were better prepared for the shock or had structures that allowed them to resist with less cost. Therefore the analysis of national performances must be carried out also at the sectoral level to understand how labour productivity trends affected competitiveness by country. More recently new risks for the European economy have emerged. Sovereign debt concerns and uncertainty about the implementation of policy measures to combat the deterioration of government budgets have affected business and consumer confidence. The resulting fiscal consolidation efforts in some Member states will weigh on domestic demand together with a slowdown of external demand causing a subdued outlook for the EU economy. The European sovereign debt crisis has not only put into question the role and viability of states but also achievements in European political and economic integration over many decades. How could it have happened and what happens next? In this article main characteristics of European economic slowdown and prospects for the near future are analysed. The new framework for economic governance recently adopted by the European Council is described as the implementation of these new rules should enhance the EU integration and offers the greatest hope for a future recovery and a greater resilience against future shocks. Finally the envisaged impact of EU future developments on neighbouring countries such as Russia is presented. In particular on the energy sector, the impact of the financial crisis is likely to continue well into the future as energy demand is significantly reduced and investment in energy sector is – by this and other related causes – visibly reduced. An evaluation of these trends through the international trade flows between Russia and EU is performed.
2011
41
63
81
Bardazzi R.; Grassini M.
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