Portal:Business/Selected economy/December 2006

The European Union has the world's largest economy, larger than that of the United States of America with a 2005 GDP of 12,865,602 million vs. 11,734,300 million (USD figures) according to the International Monetary Fund. Using the purchasing power parity method of computing GDP, the preferred comparative measure of economic output, the EU and the US economies are virtually the same size ($12.36 trillion for the US vs. $12.18 trillion for the EU). As the EU has 50% more people than the US, but produces about the same economically, the average EU citizen enjoys a per capita share of domestic product of about USD $28,100, while in the US the per person GDP is over USD $40,000.

It is estimated that in the period 2006-2020 the European Union's economy will grow at an average rate of 2.1% per annum, against the United States growing at an annual rate of almost 3.0%, however if growth is taken per head the figures are 2.5% per annum for the US and 2.0% for the EU.

The European Union's economic growth has been below that of the United States most years since 1990, while its unemployment rate has generally been higher. Many point out that there are benefits accruing to EU citizens (the "social wage") that are not visible in traditional economic data - like enhanced time off from work, social protection and other benefits. In recent years, the economic performance of several of its key members, including Germany and Italy, has been a matter of serious concern to policy makers.

Twelve members of the European Union use a common currency, the euro. This group of members (Austria, Belgium, Finland, Germany, Greece, Italy, Ireland, France, Luxembourg, Netherlands, Portugal, Spain) is known as the Eurozone. Three members (Denmark, Sweden, United Kingdom) have no current plans to join the euro, though the Danish Krone is pegged to it. The remaining members have a treaty obligation to join as soon as they meet the convergence criteria. Slovenia will adopt the euro on 1 January 2007.