A small look at the EU history
United States (US) is the largest economy in the world with a GDP of more than $18 billion. The strength of the country’s economy comes from the diversity of the country.
Its many industries including agriculture, finance, technology, real estate, and oil and gas dominate every aspect of the world. As such, the US is the envy of many countries.
In 1993, the European Union (EU) was formed. The leaders hope was that the combination of the 28 countries would create a power that could rival the US on many fronts.
By operating as a bloc – instead of different countries – the region would have more influence and leverage when dealing with many global issues. For example, when there is a trade deal, a small country like Greece would have been at a disadvantage compared to a superpower like the United States.
The EU economy is now a trillion less than that of the United States. To a large extent, the region has achieved the goal of the founders of the union. For example, whenever there is a major global issue like the Iran deal, the EU countries such as Greece and Slovenia were represented by the EU.
However, many people in the EU have felt shortchanged by Brussels, the capital of the EU. Some countries like Greece have even considered exiting the euro.
In fact, the UK has already passed a vote to exit the EU (Brexit Implications). Populism is rising in other countries like Italy, Spain, and France. On the latter, in the past election, Marin Le Pen, who was against the EU got a good number of votes.
The number will continue to grow as more people get discouraged by the EU.
What Problem will the EU face?
France VS Germany
The EU continues to face a number of challenges. One of these problems has to do with the rivalry between France and Germany. The two biggest economies in the bloc continues to operate under deep suspicion with one another.
Whenever Germany makes new proposals, France usually think that they are being bullied by the bigger economy. When France makes a decision, Germany thinks that they are doing so with their country’s electorate in mind.
This makes it very difficult for the bloc to achieve long-term goals.
From a business standpoint, the EU has embraced overregulation. Early in 2018, the region started to implement the MIFID II regulations.
These were large regulations aimed at the financial sector. The regulations document was more than a million pages long and affected at every person who uses financial services.
In May, 2018, implemented the General Data Protection Regulations (GPDR) which were aimed at every company with a website. All the other sectors are highly regulated.
As such, it is very hard for global companies to establish a business in the European Union at a time when the US has cut taxes and is increasingly deregulating the industries.
In the past ten years, the euro has been an underperforming currency (Here are the best pairs to trade). The euro index has fallen from 158 to the current price of 116. The euro index provides a weighted average of euro compared to a basket of peer currencies.