Trade Policy of European Union
The economy of the European Union generates a GDP of over €12.629 trillion (US$17.578 trillion in 2011) according to the International Monetary Fund (IMF), making it the largest economy in the world. The European Union (EU) economy consists of a Internal Market and the EU is represented as a unified entity in the World Trade Organization (WTO).
Pre-1945: Industrial growth
Prior to World War II, Europe's major financial and industrial states were the United Kingdom, France and Germany. The Industrial Revolution, which began in Britain, had spread rapidly across Europe, and before long the entire continent was at a high level of industry. World War I had briefly led to the industries of some European states stalling, but in the run-up to World War II Europe had recovered well, and was competing with the ever increasing economic might of the United States of America.
However, World War II caused the destruction of most of Europe's industrial centre’s, and much of the continent's infrastructure was laid to waste.
1945–1990: The Cold War era
Following World War II, European Government was in tatters. Many non-Socialist European governments moved to link their economies, laying the foundation for what would become the European Union. This meant a huge increase in shared infrastructure and cross-border trade. Whilst these European states rapidly improved their economies, by the 1980s, the economy of the COMECON was struggling, mainly due to the massive cost of the Cold War. The GDP and the living standards of Central and Eastern European states were lower than in other parts of Europe. Even free-market Greece, situated in South-Eastern Europe, struggled due to geographical isolation from non-socialist part of Europe.
The European Community grew from 6 original members following World War II, to 12 in this period.
Map showing regional variation in European GDP (PPP) per capita in 2006. Figures from International Monetary Fund.
Average living standards in Europe rose significantly during the post-war period, as characterised by these findings:
Per capita private consumption (PPSs) in 1980
Luxembourg: 5495
France: 5395
German Federal Republic: 5319
Belgium: 5143
Denmark: 4802
Netherlands: 4792
United Kingdom: 4343
Italy: 4288
Ireland: 3029
Per capita personal disposable income (PPSs) in 1980
Belgium: 6202
France: 6044
German Federal Republic: 5661
Netherlands: 5490
Italy: 5378
Denmark: 4878
United Kingdom: 4698
Rise of the European Union
When the 'Eastern Block' dissolved around 1991, these states struggled to adapt to free-market systems. There was, however, a huge variation in degrees of success, with Central European states such as the Czech Republic, Hungary, Slovakia, Slovenia and Poland adapting reasonably quickly, whilst states that used to form the USSR such as Russia, Belarus and Ukraine struggled to reform their crumbling infrastructures.
Many developed European countries were quick to develop economic ties with fellow European states, where democracy was reintroduced. After the Revolutions of 1989, states in Central Europe and the Baltic states dealt with change, former Yugoslavian republics descended into war and Russia, Ukraine and Belarus are still struggling with their old systems.
Europe's largest economy, Germany, struggled upon unification in 1991 with former communist German Democratic Republic, or East Germany, influenced by the Soviet Union. GDR, had had much of its industrial infrastructure removed during the Cold War, and for many years unified Germany struggled to build infrastructure in the former East Germany up to the level of former West Germany.
Peace did not come to Yugoslavia for a decade, and by 2003, there were still many NATO and EU peacekeeping troops present in Bosnia and Herzegovina, Macedonia, and Kosovo . War severely hampered economic growth, with only Slovenia making any real progress in the 1990s.
European economy was affected by September 11 Attacks in United States in 2001, Germany, Switzerland, France, and United Kingdom was hardest. But, in 2002/2003, the Economy began to recover from attacks in US.
The economy of Europe was by this time dominated by the EU, a huge economic and political organization with then 15 of Europe's states as full members. EU membership was seen as something to aspire to, and the EU gave significant support and aid to those Central and Eastern European states willing to work towards achieving economies that met the entry criteria. During this time, 12 of the 15 members of the EU became part of the Eurozone, a currency union launched in 1999, whereby each member uses a shared currency, the Euro, which replaced their former national currencies. Three states chose to remain outside the Eurozone and continue with their own currencies, namely Denmark, Sweden and the United Kingdom.