EU before Brexit - Looking underneath the headlines
The Great Financial crisis triggered the worst recession in the economic history of the European Union (EU). The Gross Domestic Product (GDP) dropped twice between 2008 and 2013 peaking back at pre-crisis level only in the last quarter of 2015, near nine years after the unprecedented downturn. Growth expectations for the remaining months of 2016 and 2017 are feeble.
The feeble GDP growth figures reflect the collapse of the aggregate demand in the region since 2008. The most vicious side effect of a collapsing aggregate demand is a generalized decline in prices, which has been threatening EU economies for more than six years. As the total number of goods and services demanded (aggregate demand) in the economy starts to fall, producers feel inclined to reduce their prices in the expectation of attracting consumers to buy their products.
Within this negative economic scenario of low demand, the financial sector has been constantly rescued by the European Central bank whilst unemployed and underemployment Europeans have been paying an extremely high price for the mismanagement of the economy from the top ranks of the society.
Analyzes the Euro area economy before Brexit.
Reasons To Buy
Is the EU going to slip apart? Are the European leaders clueless about the destiny of the EU economy ?
The feeble GDP growth within the EU reflects the collapse of the aggregate demand in the region since 2007. The most vicious side effect of a collapsing aggregate demand is a generalized decline in prices, which has been threatening EU economies for more than six years.
After the great financial crisis, investment rates within the private sector in the EU collapsed 16% never to get back to pre-crisis levels. Recently, it swung back upwards but still remains deep into the negative territory.
The economic downturn from 2008 has had a permanent impact in the investment rates of all euro area economies, shifting the economic prospects of the region to a permanent low level.
Eurostat puts the number of unemployment at 16.269 million within the euro area equivalent to 10.1% of population aged between 18 and 74 years of age. This is equivalent to the entire population of the Netherlands or eight times the population of Paris. ECB policies failed to recover the EU economy allowing long term unemployment to build up and become deeply ingrained.
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