European integration is a unique and fascinating economic and political project. This process has not followed a smooth path; it has been a sequence of advances and setbacks. The last three major advances in European integration are the establishment of the single European market, the implementation of the euro, and EU enlargement to the East. The driving forces behind this integration process are the shared political and economic values, the will to boost economic growth, employment and innovation, the will to overcome the specters of the past and—at least implicitly—the desire for political influence in the world.
The single European market is considerably more than just a free trade area; it is the most integrated market comprising of nation states in the world. The principal characteristics of the single market are the `4 freedoms', which include open markets for goods, services, capital and persons. As a consequence, there is no special treatment for EU citizens living and working in member states other than their own. The single market has boosted European trade. Today, between 50% and 90% of the exports of each EU member country are traded inside the EU (intra-EU trade).
The launch of the euro at the beginning of 1999 as a common currency was the most unique, once-in-a-century project and a true milestone in European integration. The elimination of exchange-rate risks and currency-related transaction costs have accelerated the integration process. This was partly brought about by the creation of a large and liquid financial market. The euro-area helps to absorb financial shocks. During euro's first decade, price stability has been achieved, trade and investment have been stimulated, and financial markets integrated; and the euro is second to none in international currency competition. In addition, low inflation rates have led to structurally lower interest rates, thus creating favorable financing conditions for firms, consumers and the state. |
