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The Economic Situation of the European Union

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The economic situation of the European Union has been on the minds of economists, politicians, and common people for quite a while. It is not surprising, since Europe is an important actor on the international arena and the fluctuation of its market has an impact on the world economy. When an economic entity as stable as European one starts to shake, there emerge a lot of concerns and uncertainties. The article “Europe Woes Deepen as Economies Contract” by Brian Blackstone and Christopher Emsden reviews the very recent developments in euro zone markets and voices some of the positive and negative thoughts on its future.

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The overall situation in the euro zone at the beginning of the 2013 is slightly unsettling. As indicated in the article, the GDP dropped by 2.3% in the last quarter of the last year, continuing the persisting trend of economic slow-down for European Union. Looking at individual economies, one can see the differences in their performance. For instance, Germany’s economy seems to be recovering; and the economists express optimistic views as to its improvement during 2013. France is a little unstable while the south of Europe is in the most trouble. Italy and Spain seem to be struggling to take control of their economic affairs, with the danger of crisis spreading to other spheres.

The interconnectedness of European economy is a double-edge sword, producing a lot of advantages in prosperous times and wounding deeply in the time of recession. This is the risk that all countries take when accepting the membership in the Union and adopting the common currency. At the moment Germany looks like a martyr dragging all the rest countries out of the abyss. This cannot but cause extra tension among people and countries. For an average German citizen the situation may look unfair because he/she is forced to forfeit some of the economic advantages due to instabilities in the south of Europe.

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On the other hand, Spain and Italy face a dilemma when trying to comply with strict European laws. On the one hand, these countries have to abide by the regulations to maintain the assistance of their more solvent neighbors. On the other hand, the restrictions create extremely harsh conditions for the citizens of these countries. The authors remark that the economic tension may well grow into political and social unrest. This seems rather logical as people in Spain or Italy are losing jobs and experiencing high levels of insecurity.

The current situation in the euro zone reminds a vicious circle, where currency issues play their role. The economic downturn requires some governments to impose higher taxes and cut the governmental spending. At the same time the businesses are forced to lay off their workers or cut their hours. In the light of these actions, people start reassessing their savings plans and reduce the general household spending. As a result, there is less buying to feed the weak economy. The currency instability adds to the general frustration. The euro has recently experienced a drop comparing to the US dollar. Being a common currency for a number of countries, euro is under a lot of pressure. In the mind of people there is always the memory of a national currency; and any drop in euro rates reminds them of its artificial nature.

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Overall, the article reaffirms some of the existing worries but also proposes some optimistic views about the recovery of European economy in 2013. The information presented in the article provokes the thoughts about the other members of the euro zone that are not mentioned in this particular source. Remembering the news one can see that the countries in the north of Europe also experience the slowdown in the economy, with some strong businesses losing their stability. It is interesting why the authors chose to focus on the southern countries and not mention the statistics for some other regions. In my opinion, this would provide a more comprehensive picture and allow the readers to draw more reliable conclusions.

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