Europe's Financial Outlook

50 Euro as a flag

The European economy involves more than 740 million people in 50 different countries. The formation of the European Union began in 1949, soon after the Second World War, with the creation of the Council of Europe, the first major attempt to bring together ten nations of Europe, with the intention of growing over time. However, the Council focused primarily on human rights and democracy rather than on economic or trade issues, created as a forum where sovereign governments could choose to work together, with no supra-national authority. Yet, in 1999, the European Union, now with 28 members, had introduced the unified currency, the euro, allowing for much easier cash flow within Europe.

Although there is a shared currency, wealth in Europe is not shared equally. Greece, Poland, Romania, Slovenia, and the Czech Republic are poorer than others in the European bloc, though most European countries have a GDP per capita higher than the world's average and are very highly developed.

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European economies

The European Union's GDP was estimated to be USD18.8 trillion in 2018, representing about 22 percent of the global economy, with the largest economies being Germany, the UK, and France. Outside of the European Union, other large European economies include Switzerland, Norway, Iceland and Liechtenstein which have bilateral agreements, participating in the European Single Market without joining the EU. These countries add to Europe's GDP, which means that in total, Europe is the wealthiest economy in the world and Western Europeans enjoy a high-average living standard.

Agricultural Economics in the EU

Tractor sprays the wheat

Agricultural economics is when agricultural producers apply economic methods to optimize decisions. It is a sector of economics that became popular at the beginning of the twentieth century when it dealt specifically with land usage, with a focus on maximizing crop yield at the same time as maintaining a good soil ecosystem. It has since expanded to become a much broader topic, overlapping with conventional economics so that it now influences agricultural environment and resources; risk and uncertainty; food and consumer economics; prices and incomes; market structures; trade and development; and technical change and human capital.

Farming issues

Agricultural economics includes research into the returns in agricultural production, as well as farmers' costs and supply responses. Economic theory applied to farm-level decisions can deal with risk and decision-making to develop crop insurance policies and helps farmers in developing countries to make choices about what technology to adapt to produce enough food for the growing population, taking into consideration global climate challenges such as water scarcity.

EU’s Common Agricultural Policy

Europe's agricultural sector is highly developed, with improvements in Central Europe's agriculture helped by the accession of Central European states to the EU which is helped by the Common Agricultural Policy (CAP). The CAP provides farmers with a minimum price for their products and subsidizes their exports, which increases competitiveness for their products at home and abroad. The CAP policy is controversial in global markets as it hampers free trade worldwide since protectionism sparks protectionism from other countries and creates trade blocs and in some cases, trade wars. Because of this protectionist policy, some people consider the CAP a violation of the concept of a fair-trade environment.

Banking Industry in the EU

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The world’s banking industry has recovered since the global economic crisis of 2008, with capital levels and bank profitability continuing to build, though the recovery varied across regions. The lack of a pan-European banking regulatory agency has been flagged as being the cause of the EU banking industry continuing to experience challenges whilst working towards success. The European Banking Federation (EBF) is 32 national banking associations in Europe that collectively represent a wide range of banks and is committed to creating a single market for financial services in the EU as well as supporting policies that foster economic growth.

Banking industry recent past

Many EU banks have become smaller in recent years, removing themselves from international markets, which were once highly profitable. For example, the top 5 EU banks made USD60 billion in 2007, but this fell to USD17.5 billion in 2017. Despite a fall in profits, European banks have consolidated to boost efficiency and enhance profitability. Whilst the total number of credit institutions in the EU has fallen 31 percent since 2008, Western European banks grew by 8.6 percent in 2017, compared with 5.5 percent in 2016, though this is still far behind the growth of Chinese banks over the last decade. Progress is due in many respects due to non-performing loans no longer being a significant problem in the EU with a ratio just below the world average of 3.74.

EU banks have scaled back their physical presence as clients increasingly use digital channels to interact with banks. Internet banking in the EU has grown to 51 percent from 28 percent in 2018. The number of bank branches in the EU also fell by almost 50,000 (21 percent) in the decade to 2017.

Between 2009 and 2017, the total number of credit institutions in the EU fell by 2,275, with a corresponding fall in the number of people working in credit institutions from 3.13 million to 2.74 million in the same time period.

Gambling and Lotteries in the EU

Mouse and poker cards on the table

The gambling and lotteries sector in the EU is going through a period of significant national and pan-European regulatory changes, which has been leading to rapid growth in the sector that is offering challenges as well as opportunities to those involved. With regards to revenue, Italy made more than EUR19.5 billion gross gambling revenue (GGR), the highest in Europe in 2016, followed by the United Kingdom with EUR17.1 billion. Germany (EUR11.1 billion), France (EUR9.9) and Spain (EUR8.4 billion) have also seen increases each year from both online and land-based gambling, including lotteries. In 2020, it is estimated that offline GGR in Europe will reach EUR84.3 billion.

The European Commission

The European Commission supports the modernization of legal frameworks for gambling in individual EU nations, particularly supporting administrative cooperation between regulatory authorities responsible for gambling and lotteries. The European Commission also provides support so that consumers are protected, including minors.

The European Gaming and Betting Association (EGBA)

The EGBA, based in Brussels, is an industry body representing the leading online gaming and betting operators established, licensed and regulated within the EU. EGBA works together with national authorities, EU authorities and other stakeholders to promote a safe and reliable European digital environment for online gambling.

All EGBA members are compulsorily audited on their compliance with gambling measures. EGBA is also one of the founding partners of the EU Athletes program that aims to educate 25,000 players about sports betting integrity, which is now co-funded by the European Commission.

All EGBA members are also members of the European Sports Security Association, ESSA, which drives industry efforts in fighting betting related match-fixing or related corruption in sports and ensures that consumers get a fair betting product. The association has alert and information sharing agreements with numerous leading sports governing bodies including FIFA and the IOC.

Trade in Goods and Services in the EU

Trade graphs showing on monitor

The EU is one of the world's largest players in the global trade of goods and services. For trade in goods between the 28 EU member states and the rest of the world, there was a deficit in trade between 2000 and 2012, in that the value of imports was larger than exports. This situation reversed in 2013 when there was a surplus of EUR42 billion. A surplus for trade in goods continued until 2017 reaching EUR137 billion, before turning into a small deficit of EUR25 billion in 2018.

International trade in goods

The EU, the United States, and China accounted for 45 percent of world trade in goods in 2017 and continue to be the major players. The main EU partner for exports in 2018 was the United States and for imports China. Machinery and transport equipment accounted for more than 41 percent of EU exports and 31 percent of EU imports in 2018.

The 28-member EU accounts for about 15 percent of the world’s trade in goods, which is about three times more than its trade in services, some of which can be hard to trade across borders.

Germany contributed 28 percent of all EU-28 trade of goods to non-member countries in 2018 and 18.6 percent of the EU-28’s imports. The next three largest exporters were the UK at 11 percent, Italy at 10.5 percent and France at 10.4 percent, recording no change from 2017. The largest importers from non-member countries in 2018 after Germany were the Netherlands at 14.9 percent, the UK at 14.2 percent, France at 8.9 percent and Italy at 8.7 percent. The Netherlands high share is partly explained by a vast number of goods that arrive through the EU’s leading seaport at Rotterdam.

Tourism Sector in the EU

The Eiffel Tower

Tourism is an important driver of the economic and social development of the European Union. This industry consists of a wide range of products and exotic destinations and involves several different stakeholders including both government and private businesses.

The tourism sector stimulates economic growth by generating income, employment, and investment in Europe. It helps to sustain the EU’s cultural and natural heritage, provides revenue to fund facilities and infrastructure that can be enjoyed by residents as well as tourists, improving the awareness of a common European identity and citizenship distinguished by its diversity.

In 2018, Europe was the world’s number one tourist destination with a market share of 50.8 percent and generated, both directly and indirectly, 10.3 percent of the GDP of the 28 EU member states.

The European Commission works to develop the tourism sector and its potential to enhance the growth of the EU economy further, formulating policies to encourage competitiveness amongst the foreign players investing in the sector.


In 2017, more than 538 million international tourists traveled to at least one of the EU member countries, supporting 27.3 million people working in the tourism sector, with visitor exports generating EUR400 billion.


The sustainability of the tourism sector in the EU requires cooperation between tourism enterprises, tourist destinations, and local, regional and national authorities to tackle a variety of challenges while also addressing local issues and remaining competitive.

The main challenges to developing the tourism sector are growing global competition, in particular from Asia and Africa as well as evolving demands for certain kinds of tourism such as eco-tourism, cycling tourism, and social tourism.

The European Tourism Manifesto for Growth and Jobs

In February 2019, the European Tourism Manifesto for Growth and Jobs, together with the World Travel and Tourism Council (WTTC) called on the European Commission to advance a strategic European tourism policy, which capitalizes on the potential of the tourism sector to be a key driver for economic growth and job creation.

The WTTC represents the Travel & Tourism private sector globally, with members including more than 170 leaders of the world’s leading travel and tourism companies from across the globe covering all industries within the sector.

How Politics Affects the Economy?

The EU flags in front of parliament

Political factors such as regime type, political stability, political management, corruption and trade laws all affect economic development. Government policies and administrative norms are the political factors that when enforced influence economic development. Politics influence economic development by either supporting or disrupting the process of development.

The Role of Political Factors


Political factors that generally impact significantly on economic development include the form of government within the country, whether it be democratic, authoritarian, communist, or something else. The type of government influences the policies that affect personal and public economic development, particularly through taxes and public spending since a greater level of government spending often stimulates the economy. Also, in a democratic nation, individuals can obtain small business loans and start their own company. A successful business can expand exponentially, with employees getting different rates of pay depending on the work they do. In contrast, in a communist nation, there are strict regulations which include paying all staff equally, which can impact how businesses operate and prevent growth that would increase economic development.

Government is also an unpredictable element in the economy since democratic governments have to pursue re-election every few years. Add in the effects of pressure groups which tend to change government policies, and it becomes clear that company leaders need to take responsibility to manage the impact of any new legislation that will affect their business.