| Country | Economy - overview |
| European Union | 
Internally, the EU has abolished trade barriers, adopted a common currency, and is striving toward convergence of living standards. Internationally, the EU aims to bolster Europe's trade position and its political and economic power. Because of the great differences in per capita income among member states (from $7,000 to $78,000) and in national attitudes toward issues like inflation, debt, and foreign trade, the EU faces difficulties in devising and enforcing common policies. Eleven established EU member states, under the auspices of the European Economic and Monetary Union (EMU), introduced the euro as their common currency on 1 January 1999 (Greece did so two years later), but the UK and Denmark have 'opt-outs' that allow them to keep their national currencies, and Sweden has not taken the steps needed to participate. Between 2004 and 2007, the EU admitted 12 countries that are, in general, less advanced economically than the other 15. Of the 12 most recent member states, only Slovenia (1 January 2007), Cyprus and Malta (1 January 2008), Slovakia (1 January 2009), and Estonia (1 January 2011) have adopted the euro; the remaining states other than the UK and Denmark are legally required to adopt the currency upon meeting EU's fiscal and monetary convergence criteria. The EU economy recovered from the 2008 global financial crisis with moderate GDP growth in 2010 and the first quarter of 2011, but a sovereign debt crisis in the euro zone intensified throughout 2011 and became the bloc's top economic and political priority. Despite IMF/EU bailout programs in Greece, Ireland, and Portugal, and austerity measures across the EU, significant risks to growth remain, including high official debts and deficits, aging populations, over-regulation of non-financial businesses, and doubts about the sustainability of the EMU. In 2011, in an attempt to stem the threat of contagion in the ongoing debt crisis and hold the common currency area together, euro-zone leaders boosted funding levels for the European Financial Stability Facility (EFSF) from $350 billion to almost $600 billion, expanded the EFSF's powers while making loan terms more favorable for crisis-hit countries, and established a permanent crisis facility - the European Stabilization Mechanism (ESM) - to replace the EFSF in 2013; however leaders were unable to calm market jitters throughout late 2011. Leaders have also discussed closer fiscal integration and further increasing the amount of money the EFSF can lend, but had not come to agreement on the details as of year-end 2011. |
| Falkland Islands (Islas Malvinas) |
The economy was formerly based on agriculture, mainly sheep farming, but today fishing contributes the bulk of economic activity. In 1987, the government began selling fishing licenses to foreign trawlers operating within the Falkland Islands' exclusive fishing zone. These license fees total more than $40 million per year, which help support the island's health, education, and welfare system. Squid accounts for 75% of the fish taken. Dairy farming supports domestic consumption; crops furnish winter fodder. Foreign exchange earnings come from shipments of high-grade wool to the UK and the sale of postage stamps and coins. The islands are now self-financing except for defense. The British Geological Survey announced a 200-mile oil exploration zone around the islands in 1993, and early seismic surveys suggest substantial reserves capable of producing 500,000 barrels per day. Political tensions between the UK and Argentina remain high following the start of oil drilling activities in the waters around the Falkland Islands. In September 2011, a British exploration firm announced that it plans to commence oil production in 2016. Tourism, especially eco-tourism, is increasing rapidly, with about 69,000 visitors in 2009. The British military presence also provides a sizeable economic boost. |
| Faroe Islands |
The Faroese economy is dependent on fishing, which makes the economy vulnerable to price swings. The sector accounts for about 95% of exports and nearly half of GDP. In early 2008 the Faroese economy began to slow as a result of smaller catches and historically high oil prices that continue to trouble the economy. Reduced catches, especially of cod and haddock, have continued to strain the Faroese economy. GDP grew 0.5% in 2008-09. The slowdown in the Faroese economy followed a strong performance since the mid-1990s with annual growth rates averaging close to 6%, mostly a result of increased fish landings and salmon farming, and high export prices. Unemployment reached its lowest level in the first half of 2008, but increased to 3.9% in 2009 and is rising. The Faroese Home Rule Government produced increasing budget surpluses that helped to reduce the large public debt, most of it to Denmark. However, total dependence on fishing and salmon farming make the Faroese economy very vulnerable to fluctuations in world demand. Initial discoveries of oil in the Faroese area give hope for eventual oil production, which may provide a foundation for a more diversified economy and less dependence on Danish economic assistance. Aided by an annual subsidy from Denmark amounting to about 6% of Faroese GDP, the Faroese have a standard of living almost equal to that of Denmark and Greenland. |
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This page was last updated on 3 February, 2012 |
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