EU Revision: Challenges facing Eastern European Economies

The EU single market has enlarged on several occasions – the most recent being 2004 (ten new countries) and 2007 (two new countries). For many countries of ‘New Europe’ the accession into the EU has been an event of major economic and political importance.

Enlargement occurred during a period of strong economic growth (driven by fast-growing exports in an era of globalisation) and low inflation and interest rates. One can argue that this was an opportune time to widen the single market – macroeconomic conditions were favourable.

But progress made by new EU members has not been even – most have achieved a degree of income convergence and have managed to bring down unemployment levels. But there have also been underlying problems – notably property bubbles, rising inflation and the effects of depopulation as migrant workers from central and eastern European countries in particular moved west in search of work and higher incomes.

From late 2007 onwards the global credit crunch and ensuing international slowdown and recession has hit the EU hard. The Euro Area is export dependent (more so than the USA) and economic and financial difficulties have spread into many of the new member states.

This three page revision note is designed for students preparing for their EU paper this June. EU_Revision_Eastern_Europe.pdf