ECONOMY OF THE EUROPEAN UNION: A DECADE AFTER THE CRISIS

It is now a commonplace to hear people say the European Union is embroiled in an existential crisis and stays on the verge of collapse. But such an approach seem to be too simplistic and far from being true. Indeed, though EU has been characterized by conflicting trends it has a solid economic base. The article attempts to identify key forces driving shifts in the EU economic landscape. It explains the factors affecting economic growth in Europe and shows reasons behind changing trends in the decade following the 2007-2008 economic and financial crisis. Since 2013 the EU has experiences uninterrupted economic growth. In the second half of 2018, European economy came to a slowdown. The major factor behind it is growing uncertainty resulting from the possibility of a disruptive Brexit and lingering trade tensions, especially between China and the United States. As a result, the trade-intensive manufacturing sector weakened more than services, investment suffered more than consumption. Manufacturing decelerated and business investment and productivity lost pace. As to the future, much will depend on the ability of the EC institutions and national governments to make more effective use of its potential. The policy mix needs to be rebalanced. The room for monetary policy maneuver has narrowed considerably. A greater role for fiscal, structural and prudential policy would contribute more effectively to sustainable growth of the European economy.