Europe a portrait GDP of EU members 2013

Europe: a portrait

GDP of EU members, 2013 Great variation in size of European economies

Relative size of major world economies, 2013 EU– 28 is world’s biggest trading bloc – dwarves the size of major emerging markets

Broad European characteristics • Most of Europe within EU (exceptions) • Member state populations vary from 0. 4 million (Malta) to 87 million (Germany) • GDP per head 45 (Bulgaria) to 257 (Luxembourg) (EU 28 – 100) • Social provision – 14% GDP in Latvia to 34. 6 % in Denmark • A combination of common culture and history with key differences

Common characteristics of European economies • Mixed economies – details vary • Similar trends in economic structure o Decline of primary and secondary sectors (i. e. agriculture and industry) – began earlier in Western Europe o Shift to service economy away from agriculture and manufacturing q q 1960 s: services c. 45% GDP in most countries Early 2010 s: 70– 80% the norm

Convergence in economic ideology • Western Europe – Keynesianism displaced by neo-liberalism to varying degrees • Spain, Portugal, Greece – political dictatorship/economic isolationism – converged to Western Europe • Central and Eastern Europe – 45 years as Soviet satellite and command economy – 15 years transition – convergence with Western Europe

Subject to similar domestic and international challenges • • Environment Employment Demography Increased competition from Asia • Technology changes • International economic cycles • Increased capital mobility • Economic interdependence • Economic and political integration

Europe – unity and diversity • Diversity within broad general parameters • Diversity from interaction of: o economics o politics o history o social preferences and culture • Diversity leads to difference in emphasis for policy and business

National differences • Different organisational structures o legal and finance structure o ownership o family firms, Mittlestand • Each country has own strengths o Germany: machinery/equipment, motor, chemicals o UK: food and beverages, publishing/printing, chemicals o France: food and beverages, chemicals, metal prods o Sweden: Motor, machinery/equip, pulp/paper

European social models

Sapir’s socio-economic models • Nordic model (Dk, Fin, Swe, Netherlands) o Highest level of social protection and welfare o Active labour market policy o Strong unions and compressed wage structures o Consensus

• 2. Anglo-Saxon (UK and Ireland) o Social assistance of ‘last resort’ o Weak unions, wide and increasing wage dispersion o High incidence of low paid work o Most market-oriented and little employment protection o Still differences to US where little insurance against labour market risk

• 3. Continental model (Austria, Belgium, France, Germany and Luxembourg) o The old social market model q q Market to be regulated for socially acceptable outcome – for efficiency (now questioned) and equity Those with stake in the system will be committed to it o Heavy reliance on insurance-based, nonemployment benefits and pensions o Declining but still strong unions

• 4. Mediterranean (Spain, Portugal, Greece and Italy) o Much of social spending to pensions o Social welfare systems dominated by early retirement o Collective bargaining – strong compression o Strict employment protection

Where do new member states fit in? • Differences but all have reconfigured their economic, political and social systems in last 15 years • In general – accepted economic liberalism o Baltic States “joining the EU would mean adopting rather more socially-oriented policies … Indeed a significant part of the Euroscepticism has been based on the notion that the EU is ‘far too socialistic’” Paas, 2003: www. ezoneplus. org/archiv/ o Bigger new members, not so aggressively liberal

Above leads to Sapir’s model matrix

Implications • Ideal = high equity/high efficiency • Framework does identify economies most in need of reform • Different models help explain why agreement can sometimes be difficult at European level

Europe: the future?

• 2007– 8 financial crisis caused serious problems for Europe – still recovering in some areas • Europe 2020 – a long term programme intended to restore competitiveness and deal with structural problems • Emphasises o Smart growth – i. e. education and R&D o Sustainability – efficient and green economy o Inclusive growth

Europe 2020: a response to a perceived competitiveness problem • Employment o 75% of 20– 64 year olds to be in employment • R&D o 3% of GDOP to be invested in R&D • Climate change and energy o GHG emissions to be 20% below 1990 levels o 30% energy from renewables o 20% increase in energy efficiency • Education o Early school leavers below 10% o 40% of 30– 34 year olds with tertiary education • Fighting poverty and social exclusion o 20 million fewer to be at risk of poverty and social exclusion