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Eurozone

In: Business and Management

Submitted By michellechoi
Words 2584
Pages 11
The European Union, officially implemented in 1999, created history as the first political and economic integration of its kind. However, in recent news, this union has been undergoing a series of severe economic crisis among member countries. The following paper will look to analyze this issue by examining its main causes, the reasons behind their severe suffering when compared to United States, European nationalism, and the future of international businesses in the case of a Eurozone collapse.

Main causes of Eurocrisis The causes of the Eurozone crisis are both numerous and complex creating somewhat of the perfect storm within the member countries’ respective local economies at the start of the downturn. For the purpose of analysis, the main causes of the Eurocrisis can be divided into three main categories: sovereign debt, banking and inflation, as well as politics and labor. The following case will explore these categories in further detail.
To begin with, the ratification of the Maastricht treaty, forming the European Union, brought with it two conditions that potential member countries had to meet in order to be able to adopt the Euro currency. Specifically, given the interdependent nature of the agreement, a member state was required to demonstrate economic health. This was measured annually through their maintenance of fiscal deficits under 3% of GDP, and government debt below 60% of GDP (Roscini & Schlefer, 2012, p.1). However, during the years preceding Greece’s financial woes, 6 out of the 11 members of the European Union failed to meet at least one of these standards on numerous occasions. In particular, Germany, one of Greece’s biggest critics for failing to manage the crisis correctly, “flouted the rules for four years from 2003 (and avoided punishment)” (“The causes: A very short history of the crisis,” 2011). Furthermore, Italy, Spain and...

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