205-658: The economy of the European Union is the joint economy of the member states of the European Union (EU). It is the second largest economy in the world in nominal terms , after the United States , and the third largest at purchasing power parity (PPP) , after China and the US. The European Union's GDP is estimated to be $ 19.40 trillion (nominal) in 2024 or $ 28.04 trillion (PPP), representing around one-sixth of
410-812: A customs union . They also signed another pact creating the European Atomic Energy Community (Euratom) for cooperation in developing nuclear power. Both treaties came into force in 1958. Although the EEC and Euratom were created separately from the ECSC, they shared the same courts and the Common Assembly. The EEC was headed by Walter Hallstein ( Hallstein Commission ) and Euratom was headed by Louis Armand ( Armand Commission ) and then Étienne Hirsch ( Hirsch Commission ). The OEEC
615-669: A proposal that linked funding with adherence to the rule of law . The budget included a COVID-19 recovery fund of €750 billion. The budget may still be approved if Hungary and Poland withdraw their vetoes after further negotiations in the council and the European Council . Bodies combatting fraud have also been established, including the European Anti-fraud Office and the European Public Prosecutor's Office . The latter
820-529: A " collective head of state " and ratifies important documents (for example, international agreements and treaties). Tasks for the president of the European Council are ensuring the external representation of the EU, driving consensus and resolving divergences among member states, both during meetings of the European Council and over the periods between them. The European Council should not be mistaken for
1025-470: A "2024 National Reform Programme" and "2024 Stability or Convergence Programme" analyzed, with a compliance check of the 2023 fiscal result and 2024 budget with the existing 2019-version of the SGP rules, although only 3% deficit breaches will be evaluated because no debt limit or debt reduction breach can trigger an EDP in 2024. The European Commission reasoned for its continued deactivation for another year of
1230-423: A "2024 National Reform Programme" and "2024 Stability or Convergence Programme" analyzed, with a compliance check of the 2023 fiscal result and 2024 budget with the existing 2019-version of the SGP rules; although only 3% deficit breaches will be evaluated - because no debt limit or debt reduction breach can trigger an EDP in 2024. The European Commission reasoned for its continued deactivation for another year of
1435-442: A "3‑year backward looking period based on cyclical adjusted data". If any of the periodic checks conducted by the national fiscal council finds the budget or estimated fiscal account of the general government to be noncompliant with the deficit or debt criteria of the treaty, the state is obliged to immediately rectify the issue by implementing sufficient counteracting fiscal measures or changes to its ongoing fiscal policy for
1640-425: A 126(6) report; and a deadline for the needed correction of the criteria breach - along with annual targets for the structural deficit and nominal budget balance - will be set by the simultaneous adoption of a 126(7) report. The EDP - also known as the corrective arm of the SGP, was however suspended via activation of the "general escape clause" during 2020-2023 to allow for higher deficit spending ; first due to
1845-558: A SGP compliance report for the scrutiny and evaluation of the European Commission and the Council of the European Union , that will present the country's expected fiscal development for the current and subsequent three years. These reports are called "stability programmes" for eurozone Member States and "convergence programmes" for non-eurozone Member States, but despite having different titles they are identical in regards of
2050-597: A budgetary imbalance created before 2020. The data in the table below are from the ordinary compliance check of all EU member states in May 2023, with outturn data for the 2022 fiscal year as they were published on the Eurostat website in April 2023, and budget values for 2023-2026 as they were reported by the submitted Stability programme or Convergence programme of each member state in April 2023. 16 out of 27 member states had
2255-506: A budgetary imbalance created before 2020. 16 out of 27 member states had a technical SGP criteria breach , when their 2022 fiscal results and 2023 budgets were analyzed in May 2023; because those breaches were exempted due to the finding of temporary and exceptional circumstances, reflected by the activation of the general escape clause, no new EDPs were opened against those member states. The EDP will be assessed again starting from 19 June 2024, where each country will have their usual set of
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#17327655237762460-410: A common currency area. The additional regulations complement the SGP's requirement for surveillance, by enhancing the frequency and scope of scrutiny of the member state's policymaking, but do not place additional requirements on the policy itself. The degree of surveillance will depend on the economic health of the member state. Regulation 473/2013 is directed at all eurozone member states and requires
2665-414: A comprehensive reform of the EU fiscal framework: The proposed reform aims to strengthen public debt sustainability, promote sustainable and inclusive growth through reforms and investments, increase national ownership for fiscal plans and fiscal corrections, simplify the legal framework, move towards a greater medium-term approach to budgetary policies, and ensure more effective and coherent enforcement of
2870-421: A country does not reach its MTO, it is required in the subsequent year(s) to implement annual improvements for its structural balance equal to minimum 0.5% of GDP, although several sub-rules (including the "expenditure benchmark") has the potential slightly to alter this requirement. When Member States are in this process of improving their structural balance until it reaches its MTO, they are referred to as being on
3075-487: A country-specific Medium-Term budgetary Objective (MTO). The Fiscal Compact however introduced a more strict upper MTO-limit compared to SGP, as it now at most can be set to 0.5% of GDP for states with a debt‑to‑GDP ratio exceeding 60%, while only states with debt levels below 60% of GDP will be subject to respect an upper MTO-limit at the SGP-allowed 1.0% of GDP. The exact applying country-specific minimum MTO
3280-405: A country-specific debt sustainability risk assessment, while also respecting the requirement that the annual improvements for the structural budget balance shall be minimum 0.5% of GDP. The treaty refers to that the compliance check and calculation of sufficiently required corrections for the debt-limit and "debt brake" criteria, shall be identical with the existing operating debt rules outlined by
3485-635: A debt crisis and also went through successful bailout programmes, i.e. Hungary , Romania and Latvia (the latter before it joined the eurozone). The EU has a long-term budget, named Multiannual Financial Framework (MFF), of €1,082.5 billion for the period 2014–2020, representing 1.02% of the EU-28's GNI. The overall budget for the period 2021-2027 is of €1.8 trillion combining the MFF of €1,074.3 billion with an extraordinary recovery fund of €750 billion, known as Next Generation EU , to support member states hit by
3690-479: A draft budgetary plan for the upcoming year to be submitted annually by 15 October, for a SGP compliance assessment conducted by the European Commission. The member state shall then await receiving the Commission's opinion before the draft budgetary plan is debated and voted for in their national parliament. The Commission will not be granted any veto right over the national parliaments potential pass of
3895-651: A fiscal budget, but will have the role to issue warnings in advance to the national parliaments, if the proposed draft budget is found to compromise the debt and deficit rules of the SGP. Regulation 472/2013 is concerned with the subgroup of eurozone member states experiencing or being threatened by financial instability, which is understood to be the case if the state has an ongoing Excessive Imbalance Procedure (EIP) or receives any macroeconomic financial assistance from EFSM / EFSF / ESM / IMF /other bilateral basis. These member states are made subject to even more in depth and frequent "enhanced surveillance", in order to prevent
4100-427: A fiscal council), with a mandate to verify all statistical data and fiscal budgets of the government are in compliance with the agreed fiscal rules, and ensure the proper functioning of the automatic correction mechanism. The treaty defines a balanced budget exactly the same way the SGP did, as a government budget deficit not exceeding 3.0% of the gross domestic product (GDP), and a structural deficit not exceeding
4305-425: A hybrid system of supranational and intergovernmental decision-making, and according to the principle of conferral (which says that it should act only within the limits of the competences conferred on it by the treaties ) and of subsidiarity (which says that it should act only where an objective cannot be sufficiently achieved by the member states acting alone). Laws made by the EU institutions are passed in
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#17327655237764510-518: A low-inflation policy, which had been an important part of the German economy's robust performance since the 1950s. The German government hoped to ensure the continuation of that policy through the SGP, which would ensure the prevalence of fiscal responsibility, and limit the ability of governments to exert inflationary pressures on the European economy. As such, it was also described to be a key tool for
4715-565: A member state of the eurozone can ultimately also be issued economic sanctions. The pact was outlined by a European Council resolution in June 1997, and two Council regulations in July 1997. The first regulation "on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies", known as the "preventive arm", entered into force 1 July 1998. The second regulation "on speeding up and clarifying
4920-404: A member state will be declared to be in abeyance with the debt brake rule. Otherwise the Commission will declare existence of an "apparent breach" of the debt-criterion by the publication of a 126(3) report , which shall investigate if the "apparent breach" was "real" after having taken a range of allowed exemptions into consideration. Provided no special "breach exemptions" can be found to exist by
5125-722: A much larger range of countries, partly as a so-called soft approach ('a carrot instead of a stick') to influence the politics in those countries. The European Union represents all its members at the World Trade Organization (WTO), and acts on behalf of member states in any disputes. When the EU negotiates trade related agreement outside the WTO framework, the subsequent agreement must be approved by each individual EU member state government. In 2023, over half of EU enterprises exported products or services (51%), while 53% imported goods or services. Slovenia, Slovakia, Austria, and
5330-417: A new "debt reduction rule" , commonly referred to as the "debt brake rule" , and legislatively referred to as the "1/20 numerical benchmark for debt reduction" . The new debt reduction rule entered into force at the EU level on 13 December 2011. If just one of the four quantitative debt-requirements (including the first one requesting the debt-to-GDP ratio to be below 60% in the latest recorded fiscal year)
5535-600: A permanent facility was created two years later with the establishment of the European Stability Mechanism (ESM). The latter consists of an international treaty signed on 2 February 2012 by Eurozone Members only. Ailing Members receive financial aid in the form of low-interest loans whose disbursement is attached policy conditionalities. The latter usually consist in Macroeconomic Adjustment Programs (MAPs) whose adoption
5740-570: A possible sovereign debt crises to emerge. In the post-crisis period, the legal debate on EMU largely focused on assessing the effects of both the Six- and the Two-Pack on the SGP. Most scholars admit that a considerable improvement occurred in the field of budgetary enforcement, especially for what concerns the imposition of dissuasive sanctions upon noncompliant Members. However, critical positions generally outnumber positive ones. Many have criticised
5945-486: A reaction to World War I and its aftermath. In this light the first advances for the idea of European integration were made. In 1920 John Maynard Keynes proposed a European customs union for the struggling post-war European economies, and in 1923 the oldest organisation for European integration, the Paneuropean Union was founded, led by Richard von Coudenhove-Kalergi , who later would found in June 1947
6150-598: A right of unilateral withdrawal under Article 50 of the Treaty on European Union. In addition, the principle of subsidiarity requires that only those matters that need to be determined collectively are so determined. Under the principle of supremacy , national courts are required to enforce the treaties that their member states have ratified, even if doing so requires them to ignore conflicting national law, and (within limits) even constitutional provisions. The direct effect and supremacy doctrines were not explicitly set out in
6355-481: A safety margin towards continuously respecting the government's 3% deficit limit" . The first part of this MTO, was interpreted by the Commission Staff Service to mean continuously achievement each year throughout the business cycle of a "cyclically-adjusted budget balance net of one-off and temporary measures" (also referred to as the "structural balance") at minimum 0.0% . In 2000, the second part
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6560-597: A set number of seats and is divided into sub-national constituencies where this does not affect the proportional nature of the voting system. In the ordinary legislative procedure , the European Commission proposes legislation, which requires the joint approval of the European Parliament and the Council of the European Union to pass. This process applies to nearly all areas, including the EU budget . The parliament
6765-471: A slower adjustment path towards respecting the deficit and debt limit of the SGP, and extend the maximum duration of an Excessive Deficit Procedure from four to seven years if certain reform requirements are respected. The new revised rules will be finally adopted by the European Parliament and Council of Ministers before the 2024 European Parliament election ; and fully applied starting from
6970-441: A technical "SGP criteria breach" when their 2022 fiscal results and 2023 budgets were analyzed in May 2023, but because those breaches were exempted due to the finding of temporary and exceptional circumstances - reflected by the activation of the general escape clause, no new EDPs were opened against those member states. The EDP will be assessed again starting from 19 June 2024, where each country will have their usual set of
7175-420: A technical deficit-based "SGP criteria breach" as per their 2023 fiscal results published by Eurostat in April 2024. The European Commission will await receiving the budget values for 2024-2027 via the submitted Stability programme or Convergence programme of each member state, before deciding whether or not to open an EDP for the concerned member states. The 2024 SGP compliance table below will be updated with
7380-427: A temporary exceptional event outside its control with major budgetary impact, will be exempted from the requirement to deliver a fiscal automatic correction for as long as it lasts. The treaty states that the signatories shall attempt to incorporate the treaty into EU's legal framework, on the basis of an assessment of the experience with its implementation, by 1 January 2018 at the latest. In December 2017,
7585-955: A threat, in reality the actual concern was for the Soviet Union. A few days later came the announcement of the Truman Doctrine which pledged American support for democracies to counter the Soviets. Immediately following the February 1948 coup d'état by the Communist Party of Czechoslovakia , the London Six-Power Conference was held, resulting in the Soviet boycott of the Allied Control Council and its incapacitation, an event marking
7790-497: A variety of forms. Generally speaking, they can be classified into two groups: those which come into force without the necessity for national implementation measures (regulations) and those which specifically require national implementation measures (directives). EU policy is in general promulgated by EU directives , which are then implemented in the domestic legislation of its member states , and EU regulations , which are immediately enforceable in all member states. Lobbying at
7995-545: Is a European Commission economic recovery package to support the EU member states to recover from the COVID-19 pandemic , in particular those that have been particularly hard hit. It is sometimes styled NextGenerationEU and Next Gen EU , and also called the European Union Recovery Instrument . Agreed in principle by the European Council on 21 July 2020 and adopted on 14 December 2020,
8200-478: Is a supranational political and economic union of 27 member states that are located primarily in Europe. The Union has a total area of 4,233,255 km (1,634,469 sq mi) and an estimated total population of over 449 million. The EU has often been described as a sui generis political entity combining the characteristics of both a federation and a confederation . Containing 5.8% of
8405-646: Is a decentralized independent body of the European Union (EU), established under the Treaty of Lisbon between 22 of the 27 states of the EU following the method of enhanced cooperation . The European Public Prosecutor's Office investigate and prosecute fraud against the budget of the European Union and other crimes against the EU's financial interests including fraud concerning EU funds of over €10,000 and cross-border VAT fraud cases involving damages above €10 million. Member states retain in principle all powers except those that they have agreed collectively to delegate to
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8610-640: Is based in Kirchberg, Luxembourg City alongside the Court of Justice of the European Union and the European Court of Auditors. Constitutionally, the EU bears some resemblance to both a confederation and a federation , but has not formally defined itself as either. (It does not have a formal constitution: its status is defined by the Treaty of European Union and the Treaty on the Functioning of
8815-521: Is based on the Fortune Global 500 . The twelve new member states of the European Union have enjoyed a higher average percentage growth rate than their elder members of the EU. Slovakia has the highest GDP growth in the period 2005–2015 among all countries of the European Union (See Tatra Tiger ). Notably the Baltic states have achieved high GDP growth, with Latvia topping 11%, close to China,
9020-410: Is calculated by adjusting the achieved general government balance (in % of GDP) compared to each year's relative economic growth position in the business cycle (referred to as the " output gap "), which is found by subtraction of the achieved GDP growth with the potential GDP growth . So, if a year is recorded with average GDP growth in the business cycle (equal to the potential GDP growth rate),
9225-434: Is complied with: b t ≤ {\displaystyle \scriptscriptstyle \leq } 60% or b t ≤ {\displaystyle \scriptscriptstyle \leq } bb t or b* t ≤ {\displaystyle \scriptscriptstyle \leq } bb t or b t+2 ≤ {\displaystyle \scriptscriptstyle \leq } bb t+2 , then
9430-429: Is deemed necessary to fix the imbalances which gave rise to the original instability. Bailout programs do not constitute enforcement procedure stricto sensu . However, since financial support always entails compliance with several budgetary and economic conditionalities, they can be construed as a sort of ex post enforcement mechanism. On 26 April 2023, the Commission presented three legislative proposals to implement
9635-623: Is expected to vote on the new Regulation on the preventive arm in April 2024. After the Parliament's approval, the Council of Ministers is expected to adopt the new Regulation, adopt the Regulation amending the corrective arm, and adopt the Directive amending the Directive on national budgetary frameworks. In the meantime, as a new legal framework is not yet in place, the current legal framework continues to apply in spring 2024. The reform
9840-467: Is inconsistent with EU law. It is not possible to appeal against the decisions of national courts in the CJEU, but rather national courts refer questions of EU law to the CJEU. However, it is ultimately for the national court to apply the resulting interpretation to the facts of any given case. Although, only courts of final appeal are bound to refer a question of EU law when one is addressed. The treaties give
10045-508: Is issued by the Commission in June, then the EDP is expected to be formally adopted and opened by the Council in July. Across the first seven years, since the entry into force of the Stability and Growth Pact, all EU Member States were required to strive towards a common MTO being "to achieve a budgetary position of close to balance or in surplus over a complete business cycle – while providing
10250-509: Is one of huge regional variation, with the larger economies suffering from stagnant growth and most of the newer states enjoying sustained, robust economic growth. The European Union's financial system is characterized by a large banking sector, with bank assets comprising 300% of GDP, compared to 85% in the United States. However, the EU has relatively small capital markets, with listed equity making up only 68% of GDP compared to 170% in
10455-598: Is organised as a directorial system , where the executive power is jointly exercised by several people. The executive branch consists of the European Council and European Commission. The European Council sets the broad political direction of the Union. It convenes at least four times a year and comprises the president of the European Council (presently Charles Michel ), the president of the European Commission and one representative per member state (either its head of state or head of government ). The high representative of
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#173276552377610660-693: Is planned through the CMU initiative, the EU plan put forward by the Commission in September 2015 to mobilise the free movement of capital within the EU. The plan aims "to establish the building blocks of an integrated capital market in the EU by 2019". The CMU initiative comprises 33 measures in all. The plan was updated in 2017 and in 2019, since not a single legislation will deliver the CMU. The Commissioner for Financial Stability, Financial Services and Capital Markets Union , Mairead McGuinness , former Vice-President of
10865-529: Is recalculated and set by the European Commission for each country every third year, and might be set at levels stricter than the greatest latitude permitted by the treaty. In line with the existing SGP rules, the general government budget balance of a member state will be in compliance with the TSCG deficit criteria, either if its found to be within the country-specific MTO-limit, or if its found to display "rapid progress" on its "adjustment path" towards respecting
11070-472: Is significant, with companies raising 50% less capital than those in Silicon Valley. This disparity exists across industries and is unaffected by the business cycle or year of establishment. European scale-ups face significant challenges in securing sufficient financing compared to their counterparts in the United States. Venture capital in the EU has been historically lower, amounting to only 0.3% of
11275-508: Is supported by subsidies from the European Union in the form of the Common Agricultural Policy (CAP). In 2013 this represented approximately €45 billion (less than 33% of the overall budget of €148 billion) of the EU's total spending. It was used originally to guarantee a minimum price for farmers in the EU. This is criticised as a form of protectionism , inhibiting trade, and damaging developing countries ; one of
11480-453: Is the final body to approve or reject the proposed membership of the commission, and can attempt motions of censure on the commission by appeal to the Court of Justice . The president of the European Parliament carries out the role of speaker in Parliament and represents it externally. The president and vice-presidents are elected by MEPs every two and a half years. The judicial branch of
11685-403: Is the largest exporter in the world and as of 2008 the largest importer of goods and services. Internal trade between the member states is aided by the removal of barriers to trade such as tariffs and border controls . In the eurozone , trade is helped by not having any currency differences to deal with amongst most members. The European Union Association Agreement does something similar for
11890-513: Is the official currency in 26 countries, in the eurozone and in six other European countries , officially or de facto. The EU as a region has produced the world's second-highest number of Nobel laureates in the economics field. The European Union economy consists of an internal market of mixed economies based on free market and advanced social models . For instance, it includes an internal single market with free movement of goods, services, capital, and labour. The GDP per capita (PPP)
12095-566: Is the preliminary step towards joining. They are, however, committed to join the euro by their Treaties of Accession. Starting with Greece in 2009, five of the 20 eurozone states have been struggling with a sovereign debt crisis, commonly called the European debt crisis . All these states started reforms and got bailout packages ( Greece , Ireland , Portugal , Spain , Cyprus ). As of 2015, all countries but Greece have recovered from their debt crisis. Other non-eurozone states also experienced
12300-485: Is then able to recruit staff from among the pool of candidates selected by EPSO. On average, EPSO receives around 60,000–70,000 applications a year with around 1,500–2,000 candidates recruited by the European Union institutions. The European Ombudsman is the ombudsman branch of the European Union that holds the institutions, bodies and agencies of the EU to account, and promotes good administration. The Ombudsman helps people, businesses and organisations facing problems with
12505-683: The Bretton Woods System (1944). In 1943 at the Moscow Conference and Tehran Conference , plans to establish joint institutions for a post-war world and Europe increasingly became a part of the agenda. This led to a decision at the Yalta Conference in 1944 to form a European Advisory Commission , later replaced by the Council of Foreign Ministers and the Allied Control Council , following
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#173276552377612710-673: The COVID-19 outbreak. Across the European Union, the most commonly mentioned investment barrier is the lack of trained labor. 75% of businesses in transition regions found this to be problematic. Numerous reasons, such as demographics and rising demand for skills that are less common on the market, such as those needed to support digitalization activities, might contribute to the lack of competent workers. In all areas of Europe, digital businesses have produced "better" employment with greater earnings than their non-digital counterparts. Additionally, they are more inclined to recognize and reward individuals who do well. The EU lags significantly behind
12915-553: The COVID-19 pandemic arriving as an extraordinary circumstance, and later during 2022-2023 due to the Russian invasion of Ukraine having sent energy prices up, defence spending up and budgetary pressures up across the EU. Despite the EDP suspension in 2020-2023, Romania still experienced the opening of an EDP in April 2020; but only because of existence of a deficit limit breach being recorded already for its 2019 fiscal year, which required corrective action across 2020–2024, to remedy
13120-531: The COVID-19 pandemic . The services sector is by far the most important sector in the European Union, making up 64.7% of GDP, compared to the manufacturing industry with 23.8% of GDP and agriculture with only 1.5% of GDP. Financial services are well developed within the Single Market of the Union. Companies have a greater reliance on bank lending than in the United States, although a shift towards companies raising more funding through capital markets
13325-467: The Copenhagen criteria for candidate members to join the EU were agreed upon in June 1993. The expansion of the EU introduced a new level of complexity and discord. In 1995, Austria, Finland, and Sweden joined the EU. In 2002, euro banknotes and coins replaced national currencies in 12 of the member states. Since then, the eurozone has increased to encompass 20 countries. The euro currency became
13530-669: The Council of Europe , an international organisation independent of the EU and based in Strasbourg. The European Commission acts both as the EU's executive arm , responsible for the day-to-day running of the EU, and also the legislative initiator , with the sole power to propose laws for debate. The commission is 'guardian of the Treaties' and is responsible for their efficient operation and policing. It has 27 European commissioners for different areas of policy, one from each member state, though commissioners are bound to represent
13735-547: The Court of Justice of the European Union , the European Central Bank and the European Court of Auditors . Competence in scrutinising and amending legislation is shared between the Council of the European Union and the European Parliament, while executive tasks are performed by the European Commission and in a limited capacity by the European Council (not to be confused with the aforementioned Council of
13940-556: The Covid-19 pandemic arriving as an extraordinary circumstance, and later during 2022-2023 due to the Russian invasion of Ukraine having sent energy prices up, defence spending up and budgetary pressures up across the EU . Despite the EDP suspension in 2020-2023, Romania still experienced the opening of an EDP in April 2020; but only because of existence of a deficit limit breach being recorded already for its 2019 fiscal year, which required corrective action across 2020-2024, to remedy
14145-595: The EU legal framework , all treaty provisions function as an extension to pre-existing EU regulations, utilising the same reporting instruments and organisational structures already created within the EU in the three areas: Budget discipline enforced by Stability and Growth Pact (extended by Title III ), Coordination of economic policies (extended by Title IV ), and Governance within the EMU (extended by Title V ). The full treaty applies for all eurozone member states. A voluntary opt-in for non-eurozone member states to be bound by
14350-529: The European Commission and the Council of the European Union , and the issuing of a yearly Country-Specific Recommendation for fiscal policy actions to ensure a full compliance with the SGP also in the medium-term. If a member state breaches the SGP's outlined maximum limit for government deficit and debt, the surveillance and request for corrective action will intensify through the declaration of an Excessive Deficit Procedure (EDP); and if these corrective actions continue to remain absent after multiple warnings,
14555-442: The European Commission proposed a new Council Directive to incorporate the main fiscal provisions of the TSCG (all articles of its Title III - except article 7 ) into EU law. The ECB proposed several clarifying amendments to this proposed Council Directive in May 2018, while noting a potential adoption of this Directive should only happen together with an amendment of the pre-existing Council Regulation 1466/97, in order to reflect
14760-411: The European Parliament and Council of Ministers before the 2024 European Parliament election ; and fully applied starting from the presented drafts for 2025 budgets. The first "national medium-term fiscal-structural plans" guided by the new revised fiscal rules, will cover the four-year period 2025-2028, and need to be submitted by each member state by 20 September 2024. The European Parliament
14965-757: The European Parliamentary Union (EPU). Aristide Briand —who was Prime Minister of France , a follower of the Paneuropean Union, and Nobel Peace Prize laureate for the Locarno Treaties —delivered a widely recognized speech at the League of Nations in Geneva on 5 September 1929 for a federal Europe to secure Europe and settle the historic Franco-German enmity . With large-scale war being waged in Europe once again in
15170-652: The European integration project or the construction of Europe ( French : la construction européenne ). The following timeline outlines the legal inception of the European Union (EU)—the principal framework for this unification. The EU inherited many of its present responsibilities from the European Communities (EC), which were founded in the 1950s in the spirit of the Schuman Declaration . The European Union operates through
15375-655: The Hertenstein Congress of the Union of European Federalists , one of the then founded and later constituting members of the European Movement . One month later, the French Union was installed by the new Fourth French Republic to direct the decolonization of its colonies so that they would become parts of a European community. By 1947 a growing rift between the western Allied Powers and
15580-473: The Lisbon Treaty entered into force and reformed many aspects of the EU. In particular, it changed the legal structure of the European Union, merging the EU three pillars system into a single legal entity provisioned with a legal personality , created a permanent president of the European Council , the first of which was Herman Van Rompuy , and strengthened the position of the high representative of
15785-601: The Marshall Plan , which led to the Soviets creating Comecon in response. The ensuing Hague Congress of May 1948 was a pivotal moment in European integration, as it led to the creation of the European Movement International , the College of Europe and most importantly to the foundation of the Council of Europe on 5 May 1949 (which is now Europe Day ). The Council of Europe was one of
15990-625: The Soviet Union became evident as a result of the rigged 1947 Polish legislative election , which constituted an open breach of the Yalta Agreement . March of that year saw two important developments. First was the signing of the Treaty of Dunkirk between France and the United Kingdom . The treaty assured mutual assistance in the event of future military aggression against either nation. Though it officially named Germany as
16195-529: The foreign investments made in the union total $ 5.1 trillion in 2012, by far the highest foreign and domestic investments in the world. Euronext is the main stock exchange of the Eurozone and the world's fourth largest by market capitalisation . The European Union's largest trading partners are China , the United States , the United Kingdom , Switzerland , Russia , Turkey , Japan , Norway , South Korea , India , and Canada . In 2022, public debt in
16400-410: The global economy . Germany has the biggest national GDP of all EU countries, followed by France and Italy . In 2022, the social welfare expenditure of the European Union (EU) as a whole was 27.2% of its GDP . The euro is the second largest reserve currency and the second most traded currency in the world after the United States dollar . The euro is used by 20 of its 27 members, overall, it
16605-635: The monetary branch of the European Union, the prime component of the Eurosystem and the European System of Central Banks. It is one of the world's most important central banks . The ECB Governing Council makes monetary policy for the Eurozone and the European Union, administers the foreign exchange reserves of EU member states, engages in foreign exchange operations, and defines the intermediate monetary objectives and key interest rate of
16810-416: The twopack reform entered into force in 2013. If just one of the two criteria is not complied with when conducting the first numerical check, and the following investigative article 126(3) report of the Commission concludes this "apparent breach" was non-exempted, then there will be the opening of an Excessive Deficit Procedure (EDP) against the concerned member state - declared by the Council's adoption of
17015-740: The world population in 2020, EU member states generated a nominal gross domestic product (GDP) of around US$ 16.6 trillion in 2022, constituting approximately one sixth of global nominal GDP . Additionally, all EU states except Bulgaria have a very high Human Development Index according to the United Nations Development Programme . Its cornerstone, the Customs Union , paved the way to establishing an internal single market based on standardised legal framework and legislation that applies in all member states in those matters, and only those matters, where
17220-477: The "adjustment path", and they shall annually report an updated target year for when they expect to reach their MTO. It is the responsibility of each Member State through a note in their annual Convergence/Stability report, to select their contemporary MTO at a point being equal to or above the "minimum MTO" calculated every third year by the European Commission (most recently in October 2012 ). The "minimum MTO" that
17425-408: The 126(3) report (i.e. finding the debt breach was solely caused by "structural improving pension reforms" or "payment of bailout funds to financial stability mechanisms" or "payment of national funds to the new European Fund for Strategic Investments " or "appearance of an EU-wide recession" ), then the Commission will recommend the Council to open a debt-breached EDP against the member state by
17630-661: The 1930s and becoming World War II , the question of what to fight against and what for, had to be agreed on. A first agreement was the Declaration of St James's Palace of 1941, when Europe's resistance gathered in London. This was expanded on by the 1941 Atlantic Charter , establishing the Allies and their common goals, inciting a new wave of global international institutions like the United Nations ( founded 1945 ) or
17835-592: The 20 EU member states that have fully implemented the economic and monetary union and use the euro currency . Through the Common Foreign and Security Policy , the union has developed a role in external relations and defence . It maintains permanent diplomatic missions throughout the world and represents itself at the United Nations , the World Trade Organization , the G7 and the G20 . Due to its global influence,
18040-478: The CJEU the power for consistent application of EU law across the EU as a whole. The court also acts as an administrative and constitutional court between the other EU institutions and the Member States and can annul or invalidate unlawful acts of EU institutions, bodies, offices and agencies. The General Court is a constituent court of the European Union. It hears actions taken against the institutions of
18245-417: The Council of the European Union and the "Council of Ministers", its former title), forms one half of the EU's legislature. It consists of a representative from each member state's government and meets in different compositions depending on the policy area being addressed . Notwithstanding its different configurations, it is considered to be one single body. In addition to the legislative functions, members of
18450-650: The Czech Republic are the countries with the most exporting businesses, Malta and Cyprus have the fewest. 44% of EU firms that import from China reported facing transport and logistics problems in 2023, compared to 22% of firms that import solely from within the European Union. 34% of EU firms were impacted by disruptions in logistics and transport. In 2023, the share of EU exports to the United States rose to 21%, compared to 14% in 2010. European Union in Europe (dark grey) The European Union ( EU )
18655-560: The ECB and the national central banks (NCBs) of all 27 member states of the European Union. The ESCB is not the monetary authority of the eurozone, because not all EU member states have joined the euro. The ESCB's objective is price stability throughout the European Union. Secondarily, the ESCB's goal is to improve monetary and financial cooperation between the Eurosystem and member states outside
18860-512: The EU Treaty itself. The fiscal discipline is ensured by the SGP by requiring each Member State, to implement a fiscal policy aiming for the country to stay within the limits on government deficit (3% of GDP) and debt (60% of GDP); and in case of having a debt level above 60% it should each year decrease with a satisfactory pace towards a level below. As outlined by the "preventive arm" regulation, all EU member states are each year obliged to submit
19065-401: The EU administration by investigating complaints, as well as by proactively looking into broader systemic issues. The current Ombudsman is Emily O'Reilly . The European Public Prosecutor's Office (EPPO) is the prosecutory branch of the union with juridical personality, established under the Treaty of Lisbon between 23 of the 27 states of the EU following the method of enhanced cooperation. It
19270-481: The EU budget was spent on agriculture. In 2011, direct aid to farmers and market-related expenditure amount to just 30% of the budget, and rural development spending to 11%. By 2011, 90% of direct support had become non-trade-distorting (not linked to production) as reforms have continued to be made to the CAP, its funding and its design. The European Union is a major tourist destination , attracting visitors from outside of
19475-550: The EU level by special interest groups is regulated to try to balance the aspirations of private initiatives with public interest decision-making process. The European Union had an agreed budget of €170.6 billion in 2022. The EU had a long-term budget of €1,082.5 billion for the period 2014–2020, representing 1.02% of the EU-28's GNI. In 1960, the budget of the European Community was 0.03 per cent of GDP. Of this, €54bn subsidised agriculture enterprise , €42bn
19680-420: The EU" . Any non-exempted breach of either the deficit or debt criteria of the Stability and Growth Pact declared by a 126(3) report, will however result in the publication of a 126(6) report and 126(7) report shortly afterwards, in which the Council will be recommended to open an EDP and set a deadline for when the breaching of the criteria shall have been corrected by the member state. If any EDP recommendation
19885-444: The EU's annual GDP. This is compared to almost 0.19% in the United States. While the EU has about 50% of the number of companies with a market valuation below $ 500 million compared to the United States, this share drops to 10-15% for companies with valuations between $ 500 million and $ 10 billion. The following is a list of the largest EU based stock market listed companies in 2022. The ordered by revenue in millions of US Dollars and
20090-428: The EU, over 12% of businesses introduced ideas that were novel to the country or the global market. Investment in intangible assets ( research and development , software , training , or business processes ) by EU enterprises accounted for around 38% of overall investment. Businesses in the EU were also optimistic about 2023, with 14% more predicting an increase rather than a drop in investment. The agricultural sector
20295-420: The EU, which together with the Council of the European Union is tasked with amending and approving the European Commission's proposals. 705 members of the European Parliament (MEPs) are directly elected by EU citizens every five years on the basis of proportional representation . MEPs are elected on a national basis and they sit according to political groups rather than their nationality. Each country has
20500-558: The EU. The ECB Executive Board enforces the policies and decisions of the Governing Council, and may direct the national central banks when doing so. The ECB has the exclusive right to authorise the issuance of euro banknotes . Member states can issue euro coins , but the volume must be approved by the ECB beforehand. The bank also operates the TARGET2 payments system. The European System of Central Banks (ESCB) consists of
20705-469: The European Community and the EU, and then made amendments to those founding treaties. These are power-giving treaties which set broad policy goals and establish institutions with the necessary legal powers to implement those goals. These legal powers include the ability to enact legislation which can directly affect all member states and their inhabitants. The EU has legal personality , with
20910-420: The European Council. The other 25 commissioners are subsequently appointed by the Council of the European Union in agreement with the nominated president. The 27 commissioners as a single body are subject to approval (or otherwise) by a vote of the European Parliament . All commissioners are first nominated by the government of the respective member state. The council, as it is now simply called (also called
21115-563: The European Parliament, is responsible for delivery of the initiative. According to the Global Financial Centres Index , the two largest financial centres in Europe, London and Zürich , are outside the European Union. The two largest financial centres remaining within the EU will then be Frankfurt and Luxembourg . In the European Investment Bank 's Investment survey 2021, 58% of firms in
21320-669: The European Recovery Program called Next Generation EU (NGEU). On 24 February 2022, after massing on the borders of Ukraine, the Russian Armed Forces undertook an attempt for a full-scale invasion of Ukraine. The European Union imposed heavy sanctions on Russia and agreed on a pooled military aid package to Ukraine for lethal weapons funded via the European Peace Facility off-budget instrument. Next Generation EU ( NGEU )
21525-500: The European Treaties but were developed by the Court of Justice itself over the 1960s, apparently under the influence of its then most influential judge, Frenchman Robert Lecourt . The question whether the secondary law enacted by the EU has a comparable status in relation to national legislation, has been a matter of debate among legal scholars. The European Union is based on a series of treaties . These first established
21730-465: The European Union by individuals and member states, although certain matters are reserved for the Court of Justice. Decisions of the General Court can be appealed to the Court of Justice, but only on a point of law. Prior to the coming into force of the Lisbon Treaty on 1 December 2009, it was known as the Court of First Instance. The European Central Bank (ECB) is one of the institutions of
21935-540: The European Union has been described by some scholars as an emerging superpower . The EU was established, along with its citizenship , when the Maastricht Treaty came into force in 1993, and was incorporated as an international legal juridical person upon entry into force of the Treaty of Lisbon in 2009 . Its beginnings can be traced to the Inner Six states (Belgium, France, Italy, Luxembourg,
22140-543: The European Union understood that coal and steel were the two industries essential for waging war, and believed that by tying their national industries together, a future war between their nations became much less likely. In parallel with Schuman, the Pleven Plan of 1951 tried but failed to tie the institutions of the developing European community under the European Political Community , which
22345-410: The European Union ). It is more integrated than a traditional confederation of states because the general level of government widely employs qualified majority voting in some decision-making among the member states, rather than relying exclusively on unanimity. It is less integrated than a federal state because it is not a state in its own right: sovereignty continues to flow 'from the bottom up', from
22550-481: The European Union is formally called the Court of Justice of the European Union (CJEU) and consists of two courts: the Court of Justice and the General Court . The Court of Justice is the supreme court of the European Union in matters of European Union law . As a part of the CJEU, it is tasked with interpreting EU law and ensuring its uniform application across all EU member states under Article 263 of
22755-554: The European Union). The monetary policy of the eurozone is determined by the European Central Bank. The interpretation and the application of EU law and the treaties are ensured by the Court of Justice of the European Union. The EU budget is scrutinised by the European Court of Auditors. There are also a number of ancillary bodies which advise the EU or operate in a specific area. The Union's executive branch
22960-577: The European Union, primarily in North Sea oilfields . The United Kingdom, whilst it was a member of the European Union was by far the largest producer; Denmark, Germany, Italy, Romania and the Netherlands produce oil. The European Union produced 19.8 million tonnes of oil equivalent (Mtoe) of crude oil in 2019. The EU is one of the largest consumers of oil , consuming much more than it can produce. It consumed about 350 Mtoe in 2019, importing 96.8% of
23165-475: The Eurozone countries , a surge in asylum seekers in 2015 , and the United Kingdom's withdrawal from the EU . A referendum in the UK on its membership of the European Union was held in 2016, with 51.9 per cent of participants voting to leave. The UK formally notified the European Council of its decision to leave on 29 March 2017, initiating the formal withdrawal procedure for leaving the EU ; following extensions to
23370-500: The Fiscal Compact) into their national legislation. In particular, the general government budget has to be in balance or surplus, under the treaty's definition. As a novelty, an automatic correction mechanism has to be established by written law in order to correct potential significant deviations. Establishment is also required of a national independent monitoring institution to provide fiscal surveillance (commonly referred to as
23575-531: The German surrender and the Potsdam Agreement in 1945. By the end of the war, European integration became seen as an antidote to the extreme nationalism that had caused the war. On 19 September 1946, in a much recognized speech, Winston Churchill , speaking at the University of Zürich , reiterated his calls since 1930 for a "European Union" and "Council of Europe", coincidentally parallel to
23780-748: The Netherlands, and West Germany ) at the start of modern European integration in 1948, and to the Western Union , the International Authority for the Ruhr , the European Coal and Steel Community , the European Economic Community and the European Atomic Energy Community , which were established by treaties. These increasingly amalgamated bodies grew, with their legal successor the EU, both in size through
23985-424: The Stability and Growth Pact. The outlined debt-limit and debt brake criteria established four ways for a member state to comply with the debt rules, either by simply having a gross debt level below 60% of GDP, or if above 60% of GDP it then needs to be found "sufficiently diminishing" by specific calculation formulas, either over a "3‑year forward looking period" or a "3‑year backward looking period" or
24190-412: The TSCG fiscal rules. As the content of the Directive does not cover all articles of the TSCG, it will however not replace it, but continue to coexist with TSCG. The proposed Council Directive was never adopted, but the latest 2024 reform is a new attempt to integrate the TSCG into EU law, that will likely succeed. Several secondary legislative acts were implemented to strengthen both the preventive and
24395-468: The TSCG had introduced a stricter upper limit for the structural deficit (MTO) at 0.5% of GDP for member states indebted by a debt-to-GDP ratio above 60%, which was a stricter limit than the maximum 1% of GDP being allowed by Council Regulation 1466/97 for all eurozone member states regardless of their debt-to-GDP ratio. If the Council Directive is adopted, it will align the EU fiscal rules with
24600-541: The Treaty of the Functioning of the European Union (TFEU). The Court was established in 1952, and is based in Luxembourg . It is composed of one judge per member state – currently 27 – although it normally hears cases in panels of three, five or fifteen judges. The Court has been led by president Koen Lenaerts since 2015. The CJEU is the highest court of the European Union in matters of Union law . Its case-law provides that EU law has supremacy over any national law that
24805-471: The US and China in venture capital investments , with the EU capturing only 5% of global venture capital compared to 52% in the US and 40% in China. Venture capital funds in the EU account for just 5% of the global total, whereas those in the United States and China secure 52% and 40%, respectively. The financing gap for EU scale-ups (companies that have achieved a valuation between $ 500 million and $ 10 billion)
25010-650: The Union and citizens travelling inside it. Internal tourism is made more convenient by the Schengen treaty and the euro. All citizens of the European Union are entitled to travel to any member state without the need of a visa . France is the world's number one tourist destination for international visitors, followed by Spain, Italy, and Germany. It is worth noting, however, that a significant proportion of international visitors to EU countries are from other member states. The European Union has uranium, coal, oil , and natural gas reserves . There are six oil producers in
25215-430: The Union as a whole, though the exact delimitation has on occasions become a subject of scholarly or legal disputes. In certain fields, members have awarded exclusive competence and exclusive mandate to the Union. These are areas in which member states have entirely renounced their own capacity to enact legislation. In other areas, the EU and its member states share the competence to legislate. While both can legislate,
25420-614: The Union to be ready for the new members. In May 2024, concerns rise, that the outcome of the elections in June, can undermine some of the crucial policies of the EU in the domain of environment, diplomacy, economy . The war in Ukraine by creating inflation, lowering life level created a possibility of strong changes in the 2024 elections. Since the end of World War II , sovereign European countries have entered into treaties and thereby co-operated and harmonised policies (or pooled sovereignty ) in an increasing number of areas, in
25625-424: The United States, and a limited presence of hedge funds and private equity funds. Approximately 26% of European scale-ups are acquired through mergers and acquisitions, a figure comparable to San Francisco but lower than the 37% observed in cities such as London. In mid-2021, the European Union's gross saving rate was 18% of gross disposable income , higher above the prior COVID-19 pandemic average of 11–13%. In
25830-544: The Western Allies in 1949 to regulate the coal and steel industries of the Ruhr area in West Germany. Backed by the Marshall Plan with large funds coming from the United States since 1948, the ECSC became a milestone organisation, enabling European economic development and integration and being the origin of the main institutions of the EU such as the European Commission and Parliament . Founding fathers of
26035-493: The accessions of a further 22 states from 1973 to 2013, and in power through acquisitions of policy areas. In 2012, the EU was awarded the Nobel Peace Prize . The United Kingdom became the only member state to leave the EU , in 2020; ten countries are aspiring or negotiating to join it . Internationalism and visions of European unity had existed since well before the 19th century, but gained particularly as
26240-576: The beginning of the Cold War . The year 1948 marked the beginning of the institutionalised modern European integration . In March 1948 the Treaty of Brussels was signed, establishing the Western Union (WU), followed by the International Authority for the Ruhr . Furthermore, the Organisation for European Economic Co-operation (OEEC), the predecessor of the OECD, was also founded in 1948 to manage
26445-492: The breach in example was solely caused by "extra expenditures caused by implementation of structural improving pension reforms" or "payment of bailout funds to financial stability mechanisms" or "payment of national funds to the European Fund for Strategic Investments " or "appearance of an EU-wide recession" or "other temporary and extraordinary expences specifically allowed by the currently agreed fiscal policy of
26650-416: The compliance with the new debt brake rule by the end of the transition period. The Twopack consists of two Regulations that entered into force on 30 May 2013. They are exclusively applicable to eurozone member states and introduced additional coordination and surveillance of their budgetary processes. They were deemed necessary given the higher potential for spillover effects of budgetary policies in
26855-542: The conferral upon the Union of penetrating surveillance competences. The new framework consists of a patchwork of normative acts, both within and outside the formal EU edifice. Consequently, the system is now much more complex. The Treaty on Stability, Coordination and Governance (TSCG), commonly labeled as European Fiscal Compact , was signed on 2 March 2012 by all eurozone member states and eight other EU member states and entered into force on 1 January 2013. As of today, all current 27 EU member states ratified or acceded to
27060-605: The content. After the reform of the SGP in 2005, these programmes have also included the Medium-Term budgetary Objectives (MTO), being individually calculated for each Member State as the medium-term sustainable average-limit for the country's structural deficit , and the Member State is also obliged to outline the measures it intends to implement to attain its MTO. If the EU Member State does not comply with both
27265-467: The corrective arms of the SGP. One must distinguish between the 2011 Sixpack and the 2013 Twopack. The Sixpack consists of five Regulations and one Directive, which all entered into force on 13 December 2011, although compliance with the Directive was only required by 31 December 2013. The corrective arm of the SGP (Regulation 1467/97) was amended by Regulation 1177/2011. By an entirely rewritten "article 2", this amendment introduced and operationalised
27470-416: The council also have executive responsibilities, such as the development of a Common Foreign and Security Policy and the coordination of broad economic policies within the Union. The Presidency of the council rotates between member states, with each holding it for six months. Beginning on 1 July 2024, the position is held by Hungary. The European Parliament is one of three legislative institutions of
27675-554: The countries of Central and Eastern Europe . Assessing the progress of European integration the Messina Conference was held in 1955, ordering the Spaak report , which in 1956 recommended the next significant steps of European integration. In 1957, Belgium , France , Italy , Luxembourg , the Netherlands , and West Germany signed the Treaty of Rome , which created the European Economic Community (EEC) and established
27880-453: The country-specific "Minimal Benchmark" criteria. The last round under this assessment scheme took place in Spring 2005, while all subsequent assessments were conducted according to a new reformed scheme – introducing the concept of a single country-specific MTO as the overall steering anchor for the fiscal policy. In order to ensure long-term compliance with the SGP deficit and debt criteria,
28085-490: The country-specific MTO-limit. On this point the TSCG is only stricter than SGP by using the phrase "rapid progress" (without quantifying this term), while the SGP regulation opted instead to use the phrase "sufficient progress". In line with the existing SGP rules, the European Commission will for each country set the available time-frame for the "adjustment path" until the MTO-limit shall be achieved, based on consideration of
28290-508: The crisis, some Members lost access to financial markets to refinance their debt. Clearly, the SGP framework proved not enough to ensure the stability of the Eurozone. For this reason, a bailout facility was deemed necessary to face such extraordinary challenges. The first attempt was the European Financial Stability Facility (EFSF), specifically created in 2010 to help Greece, Portugal, and Ireland. However,
28495-473: The debt limit or debt reduction rule in 2023-2024: "that compliance with the debt reduction benchmark could imply a too demanding frontloaded fiscal effort that would risk to jeopardise economic growth. Therefore, in the view of the Commission, compliance with the debt reduction benchmark is not warranted under the prevailing economic conditions." 10 out of 27 member states (Belgium, Czechia, France, Hungary, Italy, Malta, Poland, Romania, Slovakia and Spain) had
28700-457: The debt limit or debt reduction rule in 2023–2024, stating "that compliance with the debt reduction benchmark could imply a too demanding frontloaded fiscal effort that would risk to jeopardise economic growth. Therefore, in the view of the Commission, compliance with the debt reduction benchmark is not warranted under the prevailing economic conditions." In February 2024, the EU approved a revised set of SGP rules , that will introduce acceptance of
28905-420: The debt reduction requirement of the new debt brake rule three years after its EDP is abrogated. This special transitional "satisfactory pace" is calculated by the Commission individually for each of the concerned member states, and is published to them in form of a figure for: The annually required Minimum Linear Structural Adjustment (MLSA) of the deficit in each of the 3 years in the transition period – ensuring
29110-465: The deficit criteria. The final assessment for compliance with the SGP criteria of each country, will be published by the European Commission on 19 June 2024, in the form of an article 126(3) assessment report investigating if the "apparent breach" was "real" (indicated by a red color) or can be "exempted" (indicated by a yellow color). An article 126(3) assessment report can declare an apparent numerical breach "exempted" and hereby "accepted", if
29315-451: The deficit limit and the debt limit , a so-called "Excessive Deficit Procedure" (EDP) is initiated along with a deadline to comply, which basically includes and outlines an "adjustment path towards reaching the MTO". This procedure is outlined by the "dissuasive arm" regulation. The SGP was initially proposed by German finance minister Theo Waigel in the mid-1990s. Germany had long maintained
29520-509: The duration of the slow growth period and the possibility that the deficit is related to productivity-enhancing procedures. The pact is part of a set of Council Regulations, decided upon the European Council Summit 22–23 March 2005. The 2010 European sovereign debt crisis proved the serious shortcomings embedded in the SGP. On one hand, fiscal wisdom was not spontaneously followed by the majority of Eurozone Members during
29725-518: The early-2000s expansion cycle. On the other hand, the EDP was not duly carried out, when necessary, as the cases of France and Germany clearly show. In order to stabilise the Eurozone, Member States adopted an extensive package of reforms, aiming at straightening both the substantive budgetary rules and the enforcement framework. The result was a complete revision of the SGP. The measures adopted soon proved highly controversial, because they implied an unprecedented curtailment of national sovereignty and
29930-553: The effects of the pandemic. In 2020, 86% of enterprises reported previous-year investment activity, while in 2021 only 79% reported investment. 23% of EU firms changed their investment plans in 2021, with only 3% reporting a higher amount. The highest proportion of enterprises that have reduced their investment plans due to a drop in sales are in Poland, where 49% of firms have reduced investment, and in Belgium, where 47% of firms stated
30135-540: The ensuing détente led to establishment of a first truly pan-European body, the Conference on Security and Co-operation in Europe (CSCE), predecessor of the modern Organization for Security and Co-operation in Europe (OSCE). In 1979, the first direct elections to the European Parliament were held. Greece joined in 1981. In 1985, Greenland left the Communities , following a dispute over fishing rights. During
30340-456: The entire cabinet, the final say in accepting or rejecting a candidate submitted for a given portfolio by a member state, and oversees the commission's permanent civil service. After the President, the most prominent commissioner is the high representative of the union for foreign affairs and security policy, who is ex-officio a vice-president of the European Commission and is also chosen by
30545-481: The eurozone. The European Court of Auditors (ECA) is the auditory branch of the European Union. It was established in 1975 in Luxembourg in order to improve EU financial management. It has 27 members (1 from each EU member-state) supported by approximately 800 civil servants. The European Personnel Selection Office (EPSO) is the EU's civil service recruitment body and operates its selection of candidates via generalist and specialist competitions. Each institution
30750-626: The existing economic governance framework of the European Union. In February 2024, the trilogue negotiations between the co-legislators ended with a provisional political agreement on the Commissions proposal for a comprehensive reform of the SGP rules. The reform will introduce acceptance of a slower adjustment path towards respecting the deficit and debt limit of the SGP, and extend the maximum duration of an Excessive Deficit Procedure from four to seven years if certain reform requirements are respected. The new revised rules will be finally adopted by
30955-472: The first institutions to bring the sovereign states of (then only Western) Europe together, raising great hopes and fevered debates in the following two years for further European integration. It has since been a broad forum to further cooperation and shared issues, achieving for example the European Convention on Human Rights in 1950. Essential for the actual birth of the institutions of the EU
31160-403: The fiscal and economic provisions of the treaty (Title III+IV) has been declared by Denmark, Bulgaria and Romania, while this main part of the treaty currently does not apply for Sweden, Poland, Hungary and Czech Republic - until the point of time they either declare otherways or adopt the euro. Member states bound by Title III of the TSCG have to transpose these fiscal provisions (referred to as
31365-542: The fiscal rules. As per legal assessment of ECB, the Commissions reform proposals also aim to integrate the Title III articles of the European Fiscal Compact (TSCG) , and wherever provisions would be different this does not necessitate the subsequent amendment or repeal of the TSCG, because Article 2 of the TSCG ensures that the TSCG provisions will always apply and be interpreted in accordance with
31570-417: The formal EDP abrogation then taking place in 2016. During the years where the 23 member states are exempted from complying with the new debt brake rule, they are still obliged to comply with the old debt brake rule that requires the debt-to-GDP ratios in excess of 60% to be "sufficiently diminished", meaning that it must approach the 60% reference value at a "satisfactory pace" ensuring it will succeed to meet
31775-408: The government accounts throughout the long-term (calculated on basis of both future potential GDP growth , future cost of government debt, and future increases in age-related costs). The structural balance is calculated by the European Commission as the cyclically adjusted balance minus "one-off measures" (i.e. one-off payments due to reforming a pension scheme ). The cyclically adjusted balance
31980-399: The growing complexity of the enforcement procedures. The reform process had to reconcile a strong tightening of the EDP with the pressure for wider escape clauses. The tension between these opposite trends fostered the developments of complicated assessment criteria, often translated in sophisticated mathematical formulas. This not only induces confusion in the overall framework, but also makes
32185-402: The implementation of the excessive deficit procedure", sometimes referred to as the "dissuasive arm" but commonly known as the "corrective arm", entered into force 1 January 1999. The purpose of the pact was to ensure that fiscal discipline would be maintained and enforced in the EMU. All EU member states are automatically members of both the EMU and the SGP, as this is defined by paragraphs in
32390-487: The instrument is worth € 750 billion . NGEU will operate from 2021 to 2026, and will be tied to the regular 2021–2027 budget of the EU's Multiannual Financial Framework (MFF). The comprehensive NGEU and MFF packages are projected to reach €1824.3 billion. Preparing the Union for a new great enlargement is a political priority for the Union, with the goal of achieving over 35 member states by 2030. Institutional and budgetary reforms are being discussed in order to
32595-425: The interests of the EU as a whole rather than their home state. The leader of the 27 is the president of the European Commission (presently Ursula von der Leyen for 2019–2024, reelected for the 2024-2029 term), proposed by the European Council , following and taking into account the result of the European elections, and is then elected by the European Parliament. The President retains, as the leader responsible for
32800-448: The largest energy corporations in the world; and Stora Enso , which is the world's largest pulp and paper manufacturer in terms of production capacity, in terms of banking and finance the EU has some of the world's largest notably BNP Paribas , HSBC , Crédit Agricole , Grupo Santander , Société Générale and Groupe BPCE the largest bank in Europe in terms of Market Capitalisation and assets. Many other European companies rank among
33005-492: The latest data, as soon as the 2024 stability/convergence programme has been published for each country. The colors used to indicate compliance with the SGP criteria, are only preliminary selected based on whether the reported fiscal data exceeds the criteria limits after taking the Commission's latest fiscal policy statements into consideration exempting all debt-related breaches, but without taking any additional factors or subcriteria into consideration when assessing compliance with
33210-431: The member states adopting the euro, to ensure that they did not only meet the Maastricht convergence criteria at the time of adopting the euro but kept on complying with the fiscal criteria for the following years. The Excessive Deficit Procedure (EDP), also known as the corrective arm of the SGP, was suspended via activation of the "general escape clause" during 2020–2023 to allow for higher deficit spending ; first due to
33415-486: The member states can only legislate to the extent to which the EU has not. In other policy areas, the EU can only co-ordinate, support and supplement member state action but cannot enact legislation with the aim of harmonising national laws. That a particular policy area falls into a certain category of competence is not necessarily indicative of what legislative procedure is used for enacting legislation within that policy area. Different legislative procedures are used within
33620-426: The member states have since the SGP-reform in March 2005 striven towards achieving their country-specific Medium-Term budgetary Objective (MTO). The MTO is the set limit, that the structural balance relative to GDP needs to equal or be above for each year in the medium-term. Each state selects its own MTO, but it needs to equal or be better than a calculated minimum requirement (Minimum MTO) ensuring sustainability of
33825-450: The most vocal opponents was the United Kingdom, the second largest economy within the union until its withdrawal in January 2020, which repeatedly refused to give up the annual UK rebate unless the CAP should undergo significant reform; France, the biggest beneficiary of the CAP and the union's third largest (now its second-largest) economy, is its most vocal proponent. The CAP is however witnessing substantial reform. In 1985, around 70% of
34030-458: The next five years. This is compared to 42% of US firms. 27% of companies in the European Union see sustainability and the green transition as a business opportunity. The European Union's member states are the birthplace of many of the world's largest leading multinational companies , and home to its global headquarters. Among these are distinguished companies ranked first in the world within their industry/sector, like Allianz and AXA , which are
34235-498: The oil. The largest suppliers are Russia, Iraq, Nigeria, Saudi Arabia, Kazakhstan, and Norway. Transport is the largest consumer of oil, at 66.1% in 2019. All countries in the EU have committed to the Kyoto Protocol , and the European Union is one of its biggest proponents. The European Commission published proposals for the first comprehensive EU energy policy on 10 January 2007. During the green transition, workers in carbon-intensive industries are more likely to lose their jobs. In
34440-443: The output gap will then be zero, meaning that the "cyclically-adjusted balance" then will be equal to the "government budget balance". In this way, because it is resistant to GDP growth changes, the structural balance is considered to be neutral and comparable across an entire business cycle (including both recession years and "overheated years"), making it perfect to be used consistently as a medium-term budgetary objective. Whenever
34645-411: The presented drafts for 2025 budgets. The first "national medium-term fiscal-structural plans" guided by the new revised fiscal rules, will cover the four-year period 2025–2028, and need to be submitted by each member state by 20 September 2024. This is a timeline of how the Stability and Growth Pact evolved over time: In March 2005, the EU Council, under the pressure of France and Germany, relaxed
34850-405: The procedural outcome hardly predictable for Member States. Another widespread criticism concerns the high democratic deficit embedded by the SGP. National policymakers are elected democratically backed up at national level, whereas the EU (in its quality of central watchdog) is only in an indirect way. The friction between the two levels is ever more perceived in periods of economic distress, when
35055-425: The process, the UK left the European Union on 31 January 2020, though most areas of EU law continued to apply to the UK for a transition period which lasted until 31 December 2020. The early 2020s saw Denmark abolishing one of its three opt-outs and Croatia adopting the Euro . After the economic crisis caused by the COVID-19 pandemic , the EU leaders agreed for the first time to create common debt to finance
35260-459: The publication of a 126(6) report . For transitional reasons, the regulation granted all 23 EU member states with an ongoing EDP in November 2011, a 3‑year exemption period to comply with the rule, which shall start in the year when the member state have its 2011-EDP abrogated. For example, Ireland will only be obliged to comply with the new debt brake rule in 2019, if they, as expected, manage to correct their EDP in fiscal year 2015 – with
35465-426: The quest for budgetary consolidation becomes more compelling. Scholars agree in referring the issue of democratic deficit to the lack of a more federalised institutional framework for the Eurozone economic governance. The argument goes that strongly legitimated Union institutions would avoid the need for penetrating surveillance mechanisms, as they would partially shift economic policymaking at central level. Because of
35670-453: The right to sign agreements and international treaties. Stability and Growth Pact The Stability and Growth Pact ( SGP ) is an agreement, among all the 27 member states of the European Union (EU), to facilitate and maintain the stability of the Economic and Monetary Union (EMU). Based primarily on Articles 121 and 126 of the Treaty on the Functioning of the European Union , it consists of fiscal monitoring of member states by
35875-406: The rules; the EC said it was to respond to criticisms of insufficient flexibility and to make the pact more enforceable. The Ecofin agreed on a reform of the SGP. The ceilings of 3% for budget deficit and 60% for public debt were maintained, but the decision to declare a country in excessive deficit can now rely on certain parameters: the behaviour of the cyclically adjusted budget, the level of debt,
36080-408: The same category of competence, and even with the same policy area. The distribution of competences in various policy areas between member states and the union is divided into the following three categories: The European Union has seven principal decision-making bodies, its institutions : the European Parliament , the European Council , the Council of the European Union , the European Commission ,
36285-413: The same year, the Schengen Agreement paved the way for the creation of open borders without passport controls between most member states and some non-member states. In 1986, the Single European Act was signed. Portugal and Spain joined in 1986. In 1990, after the fall of the Eastern Bloc , the former East Germany became part of the communities as part of a reunified Germany . The European Union
36490-443: The same. Most green or digital businesses in the EU operate in manufacturing (33%) or infrastructure (30%). The service sector has the greatest percentage of businesses that have not engaged in digitalisation or the green transition (41%). EU enterprises were growing in terms of innovation in 2023. 39% of EU enterprises created or introduced new goods, processes, or services in the previous fiscal year, compared to 57% of US firms. In
36695-448: The second quarter of 2020, families' primary income fell by 7.3% compared to the second quarter of 2019, and their secondary income (from social security payments and other transfers) increased by 6.5% of gross income. Although EU27 GDP is rising, the percentage of gross world product is decreasing because of the emergence of economies such as China, India and Brazil. In the tables below, colours indicate best and worst performer of
36900-476: The second-largest reserve currency in the world. In 2004, the EU saw its biggest enlargement to date when Cyprus, the Czech Republic, Estonia , Hungary , Latvia , Lithuania , Malta , Poland , Slovakia , and Slovenia joined the union. In 2007, Bulgaria and Romania became EU members. Later that year, Slovenia adopted the euro, followed by Cyprus and Malta in 2008, Slovakia in 2009, Estonia in 2011, Latvia in 2014, and Lithuania in 2015. On 1 December 2009,
37105-697: The service sector were expecting long term effects of COVID-19. 56% of EU enterprises received governmental help to handle the pandemic's effects. The COVID-19 pandemic had a significant effect on sales. 49% of all EU enterprises claimed that their sales decreased since the start of 2020. The pandemic has affected sectors differently, with the number of enterprises losing money in the hotels, restaurants, arts, and leisure industries reaching roughly 25% compared to previous times, and transportation also being affected. Without government assistance, 35% of European small and medium-sized firms (SMEs) in manufacturing and services indicated their businesses would not have survived
37310-449: The several peoples of the separate member states, rather than from a single undifferentiated whole. This is reflected in the fact that the member states remain the 'masters of the Treaties', retaining control over the allocation of competences to the union through constitutional change (thus retaining so-called Kompetenz-kompetenz ); in that they retain control of the use of armed force; they retain control of taxation; and in that they retain
37515-399: The specific year(s) in concern. If a state is in breach at the time of the treaty's entry into force, the correction will be deemed to be sufficient if it delivers sufficiently large annual improvements to remain on a country specific predefined "adjustment path" towards the limits at a midterm horizon. Similar to the general escape clause of the SGP, a state suffering a significant recession or
37720-411: The states have agreed to act as one. EU policies aim to ensure the free movement of people, goods, services and capital within the internal market; enact legislation in justice and home affairs; and maintain common policies on trade , agriculture , fisheries and regional development . Passport controls have been abolished for travel within the Schengen Area . The eurozone is a group composed of
37925-412: The states joining the euro. Starting 1997, the Stability and Growth Pact has been started to ensure continuing economic and fiscal stability and convergence. Denmark is not a part of the eurozone due to its special opt-outs concerning the later joining of the euro. In contrast, the remaining states can effectively opt out by choosing when or whether to join the European Exchange Rate Mechanism , which
38130-423: The three communities, which were collectively referred to as the European Communities . Jean Rey presided over the first merged commission ( Rey Commission ). In 1973, the communities were enlarged to include Denmark (including Greenland), Ireland, and the United Kingdom . Norway had negotiated to join at the same time, but Norwegian voters rejected membership in a referendum . The Ostpolitik and
38335-414: The treaty, while the main opponent against the TSCG (the United Kingdom) left the EU in January 2020. The TSCG was intended to promote the launch of a new intergovernmental economic cooperation, outside the formal framework of the EU treaties, because most (but not all) member states at the time of its creation were willing to be bound by extra commitments. Despite being an intergovernmental treaty outside
38540-460: The two largest financial service providers in the world by revenue; WPP plc and Publicis which are the world's largest advertising agencies by revenue; Amorim , which is the world's largest cork -processing and cork producer company; ArcelorMittal , which is the largest steel company in the world; Christian Dior SE which is the biggest fashion group in the world and Inditex is the world’s second biggest fashion group; Groupe Danone , which has
38745-487: The union for foreign affairs and security policy (presently Josep Borrell ) also takes part in its meetings. Described by some as the union's "supreme political leadership", it is actively involved in the negotiation of treaty changes and defines the EU's policy agenda and strategies. Its leadership role involves solving disputes between member states and the institutions, and to resolving any political crises or disagreements over controversial issues and policies. It acts as
38950-406: The union for foreign affairs and security policy . In 2012, the EU received the Nobel Peace Prize for having "contributed to the advancement of peace and reconciliation, democracy, and human rights in Europe". In 2013, Croatia became the 28th EU member. From the beginning of the 2010s, the cohesion of the European Union has been tested by several issues, including a debt crisis in some of
39155-414: The union was 83.5% of GDP, with disparities between the lowest rate, Estonia with 18.5%, and the highest, Greece with 172.6%. There has been general growth in GDP per capita and employment, but regional differences within EU nations remain, with considerable discrepancies between capital and non-capital areas, particularly in younger Member States. In North-Western Europe, nearly 75% of women are part of
39360-457: The workforce, compared to roughly 68% in Southern Europe. Beginning in the year 1999 with some EU member states , now 20 out of 27 EU states use the euro as official currency in a currency union. The remaining 7 states continue to use their own currency with the possibility to join the euro later. The euro is the most widely used currency in the EU. Since 1992, the Maastricht Treaty sets out rigid economic and fiscal convergence criteria for
39565-435: The world leader at 9% on average for the past 25 years (though these gains have been in great part cancelled by the late-2000s recession ). Reasons for this growth include government commitments to stable monetary policy , export-oriented trade policies, low flat-tax rates and the utilisation of relatively cheap labour. In 2015 Ireland had the highest GDP growth of all the states in EU (25.1%). The current map of EU growth
39770-427: The world leadership in the dairy products market. Anheuser-Busch InBev is the largest beer company in the world; L'Oréal Group , which is the world's largest cosmetics and beauty company; LVMH , which is the world's largest luxury goods conglomerate; Nokia Corporation , which was the world's largest manufacturer of mobile telephones ; Shell plc , Électricité de France , TotalEnergies , Eni which are one of
39975-738: The world's largest companies in terms of turnover, profit, market share, number of employees or other major indicators. A considerable number of EU-based companies are ranked among the world's top-ten within their sector of activity. Europe is also home to many prestigious car companies such as Aston Martin , Alpine , BMW , Bugatti , Ferrari , Jaguar , Lamborghini , Land Rover , Maserati , Mercedes-Benz , Porsche , Volvo , as well as volume manufacturers such as Automobile Dacia , Citroën , Fiat , Opel , Peugeot , Renault , Seat , Volkswagen and more. In Europe, 33% of jobs are within enterprises that have not digitally transformed. These companies were also less likely to train their employees throughout
40180-465: The year concerned. The EU seasonally adjusted unemployment rate was 6.7% in September 2018. The euro area unemployment rate was 8.1%. Among the member states, the lowest unemployment rates were recorded in the Czech Republic (2.3%), Germany and Poland (both 3.4%), and the highest in Spain (12.3% in 2024) and Greece (19.0 in July 2018). The following table shows the history of the unemployment rate for all European Union member states: The European Union
40385-519: The years to come, the transition to a carbon-neutral economy will put more jobs at danger in regions with higher percentages of employment in carbon-intensive industries. Employment opportunities by the green transition are associated with the use of renewable energy sources or building activity for infrastructure improvements and renovations. Energy costs remain a major obstacle to investment to 46% of EU firms. 34% of EU firms say that stricter climate standards and regulations will affect their business over
40590-445: Was $ 60,688 in 2023, compared to $ 82,715 in the United States, $ 51,399 in Japan and $ 24,503 in China. There are significant disparities in GDP per capita (PPP) between member states ranging from $ 151,146 in Luxembourg to $ 39,185 in Bulgaria . With a medium Gini coefficient of 29.6, the European Union has a more egalitarian distribution of income than the world average. EU investments in foreign countries total $ 9.1 trillion, while
40795-401: Was adopted and entered into force on 30 April 2024, and induced the following changes to the SGP: Both eurozone and non-eurozone EU member states are subjected to a regular compliance check with the SGP deficit and debt criterion. Minimum one ordinary check per year was conducted for all member states since 1998, and minimum two ordinary checks per year for all eurozone member states since
41000-432: Was formally established when the Maastricht Treaty —whose main architects were Horst Köhler , Helmut Kohl and François Mitterrand —came into force on 1 November 1993. The treaty also gave the name European Community to the EEC, even if it was referred to as such before the treaty. With further enlargement planned to include the former communist states of Central and Eastern Europe, as well as Cyprus and Malta ,
41205-412: Was in turn reformed in 1961 into the Organisation for Economic Co-operation and Development (OECD) and its membership was extended to states outside of Europe, the United States and Canada. During the 1960s, tensions began to show, with France seeking to limit supranational power. Nevertheless, in 1965 an agreement was reached, and on 1 July 1967 the Merger Treaty created a single set of institutions for
41410-407: Was interpreted and operationalized into a calculation formula for the MTO also to respect the so-called "Minimal Benchmark" (later referred to as "MTO Minimum Benchmark"). When assessing the annual Convergence/Stability programmes of the Member States, the Commission Staff Service checked whether the structural balance of the state complied with both the common "close to balance or surplus" criteria and
41615-418: Was spent on transport , building and the environment, €16bn on education and research , €13bn on welfare, €20bn on foreign and defence policy, €2bn in finance , €2bn in energy , €1.5bn in communications, and €13bn in administration. In November 2020, two members of the union, Hungary and Poland, blocked approval to the EU's budget at a meeting in the Committee of Permanent Representatives (Coreper), citing
41820-401: Was the Schuman Declaration on 9 May 1950 (the day after the fifth Victory in Europe Day ) and the decision by six nations (France, Belgium, Netherlands, Luxembourg, West Germany and Italy) to follow Schuman and draft the Treaty of Paris . This treaty was created in 1952 the European Coal and Steel Community (ECSC), which was built on the International Authority for the Ruhr , installed by
42025-467: Was to include the also proposed European Defence Community , an alternative to West Germany joining NATO which was established in 1949 under the Truman Doctrine . In 1954 the Modified Brussels Treaty transformed the Western Union into the Western European Union (WEU). West Germany eventually joined both the WEU and NATO in 1955, prompting the Soviet Union to form the Warsaw Pact in 1955 as an institutional framework for its military domination in
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