1.6.4 Summary EU enlargement is going to impose new problems for both monetary and fiscal policy. The process by which the accession countries can enter the Euro-zone will be long and will possibly lack stability. According to the rules of the SGP fiscal retrenchment is called for some governments because of government sector imbalances, though this might be offset by payments to the accession countries and regions from Structural and Co
1.6.3 Fiscal retrenchment? If we turn to fiscal issues, at the time of entry to the EU in 2004, six of the ten entry countries had government deficits in excess of the SGP/ Maastricht Treaty 3 per cent of GDP rule: the Czech Republic (−5.9 per cent), Cyprus (−4.6 per cent), Hungary (−4.9 per cent), Malta (−5.9 per cent), Poland (−6.0 per cent) and Slovakia (−4.1 per cent). Thus these countries would be required to cut back on their public expenditures or increase taxes so as to move into a more or less bala
1.6.2 Joining the Euro-zone For all the new members there will be a process of ‘catching up’ with the older members before the former can join the Euro-zone. The GDP gap between them remains considerable. In 2002 the GDP per capita was 60 per cent of the EU average for Slovenia and the Czech Republic (in PPP terms (see the footnote to Author(s):
1.6.1 Introduction Of course, there is another problem hovering in the background in respect to the Euro's international role: namely that of the enlargement of the EU. In the light of the analysis so far two areas are picked out here: monetary implications and fiscal policy implications. These are obviously closely related. Both of these raise questions about the costs involved for the new members and those set to join somewhere down the line. We concentrate on the monetary issue of joining the Euro-zone first
1.5.4 Summary The Euro has become an important currency of denomination for government and corporate bonds. There is now emerging a two-currency world, made up of the US dollar and the EU Euro. The advantages to countries of being able to borrow internationally in their own currencies have not been lost to them, so there will be an incentive for the east-Asian countries to develop their own ‘regional’ financial markets.
1.5.2 Consequences of introducing the Euro into the international system The jump in the Euro as currency of choice for bond denomination in 1999 in part reflects the advent of the Euro as a common currency across the Euro-zone. But is has also encouraged those countries in the EU who are not in the Euro-zone, or those not in the EU at all, to borrow in Euros as well. The point about the consolidation and integration of the Euro bond market discussed in Author(s):
1.5.1 A ‘two currency’ world? The introduction of the Euro threatens to have a significant impact on the international monetary economy as well as on the economies of the EU countries themselves. As yet this impact is not altogether clear since the Euro has only been operating for a few years. But certain trends are emerging and the possibilities are opening up. It is the main features of these trends that we concentrate upon in this section. A preliminary point here is that the Euro exchange rate is not a policy va
1.4.3 Summary EMU has been accompanied by fiscal rules embodied in the SGP. An issue raised by this is the compatibility of a common single monetary policy target designed to defeat inflation with different fiscal policies ostensibly at the discretion of the individual govern ments. When France and Germany contravened the SGP fiscal rule, it was effectively suspended and broke down. This was a case of the Council of Ministers asserting c
1.4.2 Struggles over the SGP The real political struggles emerged at the end of 2003 when France and Germany were called to account by the Commission for overtly breaking the 3 per cent deficit rule. The background to this dispute can be seen in the data presented in Table 3. Clearly, although the EU-15 as a whole were ke
1.3 The arrival of the Euro and the European Central Bank The ECB (founded in 1998) is a formally independent body charged with defining and implementing monetary policy for the EU. It holds the reserves of the national banks of those participating in the Euro-zone, and also has responsibility for the Euro exchange rate (see Section 1.5). This independence
1.2.2 Summary The EU-15/25 is a large and prosperous player on the world economic stage. It represents a continental-sized economy, able to compete with the USA and Japan (and China and India, somewhere down the line). The new EU members who joined in 2004, and those lining up to join later, are at a different level of development to the EU-15. This will pose considerable challenges for those managing and governing the n
1.1 Managing the European economy after the introduction of the Euro In many ways the introduction of the Euro both begged the question of an integrated financial system for Europe (or the Euro-zone in the first instance) and was stimulated by its own success. This success can be measured in terms of a relatively low-inflation economy and, after a shaky start, the Euro's emergence as an international currency of some repute. Thus one of the first issues to deal with in this unit is the background to the institutional changes that Economic and Monetary Union (E
Learning outcomes After studying this unit you will: appreciate the importance of the Euro-zone economy as a player in the international economic system; recognise the importance and role played by the European Central Bank in the conduct of Euro-zone monetary policy; understand the relationship between monetary policy and fiscal policy in the management of the European economy; reflect on the consequences of Euro-zone enlargement for the conduct econo
Introduction This unit focuses on key developments in the economy of the European Union (EU) since the advent of the Euro in 1999. Further, it concentrates on the challenges this has posed for economic policy formation and the governance of the EU's expanding economy. One of the central features of the post-Maastricht governance environment is the attempt to create a ‘single market in services’ for Europe. If the 1990s was the decade of the ‘single market programme’ (SMP) which concentrated on the
Acknowledgements The content acknowledged below is Proprietary (see terms and conditions) and is used under licence. Grateful acknowledgement is made to the following sources for permission to reproduce material in this unit: Figure 4 Institute of British Geographers; Tube
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References 4.3 Summary If social researchers are to be effective in understanding people, they need to be detached from common sense (the perspective of the person on the street). However, they should not be so detached that they fall into the trap of imposing their own categories upon the object without regard for the experience of those involved (the perspective of the expert). The standpoint of the ‘stranger’ provides a way of mediating between the detached position of the scientist and the personal ex 4.2 The perspective of the stranger One way in which it is possible to build links between everyday experience and social scientific research is to adopt the approach recommended by the philosopher and sociologist Alfred Schütz (1899–1959). As a refugee from Austria in the late 1930s, he found himself transported to America and encountered considerable difficulties in reorienting himself to new conditions and a new culture. This personal experience of not having familiar bearings, and of encountering the impact of cultural d 3.3 Summary Social scientific inquiry, like all human practices, operates through a set of taken-for-granted assumptions and draws upon the same skills we use in everyday life. It is difficult to separate the treatment of facts in social science from deeply embedded cultural values. Social scientific knowledge is situated in two ways: historically in terms of the shared values and guidelines transmitted from previous studies in the social sciences, and socially within a specific cultu 3.2 What does it mean for knowledge to be situated? Scientific knowledge has been frequently portrayed as universally true. If this were the case then there would be no fundamental disagreements, for what counts as true would never change. However, what has been considered scientific in the past is now often seen as archaic or simply odd. The opposite approach would be to say that truth is relative – no one view is superior to any other. Both of these positions are simplistic. Contemporary defenders of science would argue that science is imp
