The Hindu : International : E.U. faces host of economic problems

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Monday, Apr 23, 2007
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International

E.U. faces host of economic problems

Batuk Gathani

LONDON: The European Union, which completed 50 years of existence recently, is in a sombre mood with the rate of inflation touching 3.5 per cent against the 2.5 per cent parameter set by the European Central Bank.

In addition, the number of the unemployed in the member states is now over 20 million. On the plus side, Europeans are enjoying "more than comfortable" living standards.

Observers state that the E.U. is "mired in a mid-life crisis" and the biggest problem is economic. There are concerns that the prosperity cannot be sustained for long with the new Asian economic giants fast capturing European markets. But with wage levels in India and China too rising — though currently they are one-tenth of the E.U. levels — the threat of the Asian economies may be overrated.China's trading profile in the E.U. and the global market place is six times larger than India's.

Peter Mandelson, the E.U. Trade Commissioner (Minister), has launched a drive against barriers in a quest to promote free trade, particularly to gain easier market access for European companies in emerging markets such as Russia, India, China and Brazil.

Mr. Mandelson said, "European businesses rely heavily on growing markets abroad to fuel economic growth at home". This is a major deviation from traditional European strategy, initiated and articulated by the former Trade Commissioner Pascal Lamy, who focused on multilateral trade deals.

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