EUROPEAN UNION RESPONSE TO THE ECONOMIC AND FINANCIAL CRISIS

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During the economic and financial crisis, the European Union acted rapidly to define a common approach for restoring confidence in the financial industry and preserving and promoting economic growth, and succeeded in preventing a meltdown of European financial markets, saving millions of jobs.

In December 2008, European countries agreed on a European Economic Recovery Plan – a coordinated fiscal stimulus that amounted to approximately 5 percent of GDP in 2009 and 2010. The European Central Bank cut its benchmark rate to an historic low of 1 percent and adopted a series of unconventional measures to inject liquidity into the financial system and get credit flowing again.

European countries also undertook significant interventions to stabilize their financial sectors. Together, the EU countries injected nearly €300 billion worth of capital into financial institutions and extended €2.5 trillion worth of guarantees. The EU adopted new rules on hedge funds and private equity, and as of January 2011 a new financial supervision system is in place for the 27 Member States. European Heads of State and Government also agreed on the establishment of a permanent crisis management mechanism to safeguard the financial stability of the eurozone from 2013 onward.

Recent data show that the euro is back where it was before the crisis and that Europe's economic recovery has gained momentum. Apart from solid export performance, domestic demand has contributed to stronger growth. Employment is starting to recover. In addition, citizen confidence is high: according to the German Marshall Fund's 2010 Transatlantic Trends survey, the majority of EU respondents agreed that being a member of the EU has been a good thing for their country's own economy.

Several Member States are now implementing economic recovery plans to put their fiscal houses in order. EU countries have created conditions for greater coordination of economic policies, and are laying the groundwork for sustainable economic growth in the medium and long term.

Below are links to key EU websites dealing with this topic and to relevant press releases and documents issued within the past 12 months or so:

Last Updated on Friday, 09 December 2011 15:41