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The '''European Union (EU)''' is an experiment in [[globalism]], combining very different cultures and nations into one legal, political and economic union of 27 [[European]] countries. It was formed in 1993 with the ratification of the [[Maastricht Treaty]], though its predecessor, the [[European Economic Community]], was founded in 1957. It is not the same as "[[Europe]]", though most European nations have joined the EU.

The '''European Union (EU)''' is an experiment in [[globalism]], combining very different cultures and nations into one legal, political and economic union of 28 [[European]] countries. It was formed in 1993 with the ratification of the [[Maastricht Treaty]], though its predecessor, the [[European Economic Community]], was founded in 1957. It is not the same as "[[Europe]]", though most European nations have joined the EU.

As a set of institutions, the EU has more powers over its member states and their citizens than other international bodies; many of its competencies are supranational (above the member states) rather than intergovernmental (between them).  Despite having a legal personality and sovereignty in agreed areas, it is not regarded as a federation or state in its own right: rather, it stands somewhere between these two points. Fifteen member states use a common currency, the '''[[euro]]'''<ref>Five other states formally agree to use it, and four others use it without formal agreement.</ref>.   

As a set of institutions, the EU has more powers over its member states and their citizens than other international bodies; many of its competencies are supranational (above the member states) rather than intergovernmental (between them).  Despite having a legal personality and sovereignty in agreed areas, it is not regarded as a federation or state in its own right: rather, it stands somewhere between these two points. Fifteen member states use a common currency, the '''[[euro]]'''<ref>Five other states formally agree to use it, and four others use it without formal agreement.</ref>.   

==Economy==

==Economy==

The institutions of the European Union were originally created to oversee the operation of the several economic communities that later became the Single European Market. Even as the EU's political integration has continued, the area of greatest integration has always been in the economic sphere: goods, capital, and labour move freely between member states (with exceptions for goods which pose a public health risk), businesses in all member states are increasingly subject to common basic rules, and fifteen of the 27 member states use a common currency, the euro. The rest of the states are legally obliged to adopt the euro when their economies meet strict ''Convergence Criteria''. The fifteen euro-area countries share a common monetary policy administered by the European Central Bank in Frankfurt, Germany. The EU strives to eliminate internal barriers to the free flow of goods, services, labour, and capital, and to promote the overall convergence of living standards. Internationally, the EU aims to strengthen Europe's trade position and capitalise on the political and economic leverage that a large, unified market brings.  

The institutions of the European Union were originally created to oversee the operation of the several economic communities that later became the Single European Market. Even as the EU's political integration has continued, the area of greatest integration has always been in the economic sphere: goods, capital, and labour move freely between member states (with exceptions for goods which pose a public health risk), businesses in all member states are increasingly subject to common basic rules, and fifteen of the 28 member states use a common currency, the euro. The rest of the states are legally obliged to adopt the euro when their economies meet strict ''Convergence Criteria''. The fifteen euro-area countries share a common monetary policy administered by the European Central Bank in Frankfurt, Germany. The EU strives to eliminate internal barriers to the free flow of goods, services, labour, and capital, and to promote the overall convergence of living standards. Internationally, the EU aims to strengthen Europe's trade position and capitalise on the political and economic leverage that a large, unified market brings.  

===Growth===

===Growth===

===Fiscal and Monetary Policy===

===Fiscal and Monetary Policy===

Introduced in 1999, the euro is currently the official currency of fifteen of the 27 EU member states. The United Kingdom, Denmark and Sweden chose to retain their national currencies, and some of the newer EU members have yet to meet the strict economic conditions required to adopt the euro. Prior to the euro's launch in 1999, national currency exchange rates of countries intending to join the euro were fixed within an Exchange Rate Mechanism. Following the January 2002 introduction of euro notes and coins into general circulation, national currencies were removed from circulation. Each of the euro area countries agreed to abide by a shared fiscal policy rule book known as the Stability and Growth Pact (SGP). This agreement generally obliges national governments to limit government budget deficits to 3 percent of GDP and established a target debt-to-GDP ratio of below sixty percent. Although enforcement actions have been forgiving – France and Germany, for example, avoided sanctions despite missing SGP targets – countries violating the SGP are technically subject to sanctions by the European Commission. As of March 2005, national governments have been granted budget leeway to achieve structural reforms and to combat prolonged stagnation, negative growth or other factors, such as the cost of German reunification or state pensions. The revised standards still require deficits to remain close to the targets; they may only temporarily exceed the three percent limit.

Introduced in 1999, the euro is currently the official currency of fifteen of the 28 EU member states. The United Kingdom, Denmark and Sweden chose to retain their national currencies, and some of the newer EU members have yet to meet the strict economic conditions required to adopt the euro. Prior to the euro's launch in 1999, national currency exchange rates of countries intending to join the euro were fixed within an Exchange Rate Mechanism. Following the January 2002 introduction of euro notes and coins into general circulation, national currencies were removed from circulation. Each of the euro area countries agreed to abide by a shared fiscal policy rule book known as the Stability and Growth Pact (SGP). This agreement generally obliges national governments to limit government budget deficits to 3 percent of GDP and established a target debt-to-GDP ratio of below sixty percent. Although enforcement actions have been forgiving – France and Germany, for example, avoided sanctions despite missing SGP targets – countries violating the SGP are technically subject to sanctions by the European Commission. As of March 2005, national governments have been granted budget leeway to achieve structural reforms and to combat prolonged stagnation, negative growth or other factors, such as the cost of German reunification or state pensions. The revised standards still require deficits to remain close to the targets; they may only temporarily exceed the three percent limit.

The euro area's monetary policy is set by the European Central Bank (ECB), which must devise a monetary policy to accommodate a wide range of domestic policies and economic conditions within the euro area. The Treaties require that the ECB's primary objective be to maintain price stability (i.e., to keep inflation low). Euro area national governments have sometimes criticised the ECB for guarding against inflation at the expense of interest rate flexibility that could enable struggling economies to gain traction. The ECB's consistent overnight interest rate of two percent has been credited with creating favourable conditions for growth in Spain and Ireland, but has been blamed for hindering growth in France, Germany, Italy, and Portugal. Non-EU countries have also adopted the euro, including Andorra, United Kingdom base areas, Kosovo, Monaco, Montenegro, and the Vatican City. Additionally, several countries have currencies pegged to the euro, including French African states and those in the Exchange Rate Mechanism.

The euro area's monetary policy is set by the European Central Bank (ECB), which must devise a monetary policy to accommodate a wide range of domestic policies and economic conditions within the euro area. The Treaties require that the ECB's primary objective be to maintain price stability (i.e., to keep inflation low). Euro area national governments have sometimes criticised the ECB for guarding against inflation at the expense of interest rate flexibility that could enable struggling economies to gain traction. The ECB's consistent overnight interest rate of two percent has been credited with creating favourable conditions for growth in Spain and Ireland, but has been blamed for hindering growth in France, Germany, Italy, and Portugal. Non-EU countries have also adopted the euro, including Andorra, United Kingdom base areas, Kosovo, Monaco, Montenegro, and the Vatican City. Additionally, several countries have currencies pegged to the euro, including French African states and those in the Exchange Rate Mechanism.

===Expansion===

===Expansion===

In 2004, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia joined the EU, and in 2007 Bulgaria and Romania acceded, bringing total membership to 27. Candidate countries currently include  Turkey, FYR Macedonia and Croatia, and potential candidates include the rest of the Western [[Balkans|Balkan]] states.   

In 2004, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia joined the EU, and in 2007 Bulgaria and Romania acceded, bringing total membership to 28. Candidate countries currently include  Turkey, FYR Macedonia and Croatia, and potential candidates include the rest of the Western [[Balkans|Balkan]] states.   

In October 2004, member states signed an EU Constitutional Treaty designed to replace all previous treaties. French and Dutch voters rejected the treaty through referendums in 2005, thereby suspending the ratification process. In 2007, a modified '''Treaty of Lisbon''' was agreed upon, which retains most of the reforms of the Constitution, but amends rather than replaces previous treaties.

In October 2004, member states signed an EU Constitutional Treaty designed to replace all previous treaties. French and Dutch voters rejected the treaty through referendums in 2005, thereby suspending the ratification process. In 2007, a modified '''Treaty of Lisbon''' was agreed upon, which retains most of the reforms of the Constitution, but amends rather than replaces previous treaties.