EconoGraphics

The European Union’s 28 member nations are required by Stability and Growth Pact to keep their budget deficits to within 3 percent of GDP. According to the European Commission forecast (as of winter 2016) six countries will exceed this level in 2016: the U.K., France, Spain, Greece, Croatia and Portugal. Romania will post a deficit at the threshold. This is an improvement from 2009 and 2010, when no fewer than 22 EU countries overstepped the deficit limit.

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Asylum applications to the European Union (EU) set an all-time record in 2015, more than doubling the 2014 figure, according to EUROSTAT. After the recent agreement between Turkey and the EU, the influx of refugees is expected to decrease significantly.

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On June 23, British citizens will decide on a referendum whether the UK stays or leaves the EU. The consequences of a vote to leave, or Brexit, could decide the UK’s place in the world for generations.

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France’s economy has struggled to grow in recent years, expanding by a mere 1.1% in 2015. Meanwhile its unemployment rate has stubbornly lingered around 10%, with a slight upwards trend.

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On March 10, the European Central Bank (ECB) announced an expansion of its Quantitative Easing Program (QE), increasing the amount of government bonds it buys monthly from €60 billion to €80 billion. It also extended the range of assets it purchases to include investment grade non-bank corporate bonds. On top of that, the ECB lowered already negative deposit interest rates further down, to -0.4%, and its main interest rate to 0%. So, why have Central Banks embraced QE?

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The 12th round of negotiations for the Transatlantic Trade and Investment Partnership (TTIP) concluded last week in Brussels on an optimistic tone. The Chief Negotiator for the EU announced significant advances in most negotiating areas, including on the Investor-State-Dispute Settlement (ISD), which had been frozen for months. His US counterpart expressed confidence in reaching an ambitious deal in the second half of the year, rejecting calls for a “TTIP lite”.

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The 12th round of negotiations for the Transatlantic Trade and Investment Partnership (TTIP) unfolded this week in Brussels between the EU and their American counterparts. At a time when both parties are stuck with weak growth (and persistent high unemployment in Europe), the importance of TTIP cannot be understated. When the deal is reached, it will govern the ties between combined $35 trillion dollar economies, with $5.5 trillion in commerce every year that generates up to 15 million jobs on both sides of the Atlantic. In terms of Foreign Direct Investment (FDI), the US and the EU are each other’s primary destination. Even in the wake of rising investment to and from China, it pales when compared to accumulated stocks of transatlantic FDI, as can be seen in the graphic.

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In the past weeks, the Portuguese government and EU authorities have engaged in a tug of war over the Portuguese budget proposal for 2016. The European Commission (EC) warned the newly elected anti-austerity government that it risked “serious non-compliance” with the EU’s fiscal rules. Finally, Lisbon narrowly avoided becoming the first Eurozone country to have its budget rejected by Brussels, as it agreed to additional tax hikes and spending cuts.

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Why are Google, Apple or Facebook American-born but not European? Concerns about Europe’s lack of innovative start-ups prompted the European Commission (EC) to launch the Entrepreneurship 2020 Action Plan, aimed at bolstering entrepreneurship culture. Yet blaming European culture would be misleading as vibrant start-up ecosystems in London, Berlin, Milan or Amsterdam attest. In fact, the number of startups in Europe is similar to the US in relative terms, according to the Startup Europe Partnership (SEP).

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Europe's fragile recovery has been ailing from low levels of investment. While GDP and consumption have surpassed their pre-crisis levels, by the end of 2014 gross capital formation was still around 15% below its 2007 peak (€230 billion to €370 billion less than the EU's long term investment average). That is why the EU launched an ambitious investment plan, the European Fund for Strategic Investments (EFSI). Its goal is to unlock investments of €315 billion over 3 years and create more than 2 million jobs.

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