- The European Union (EU) is a unique economic and political union between 27 European countries.
- The United Kingdom, which had been a founding member of the EU, left the organization in 2020.
- The EU was created by the Maastricht Treaty, which entered into force in 1993. The treaty was designed to enhance European political and economic integration by creating a single currency (the euro), a unified foreign and security policy, and common citizenship rights and by advancing cooperation in the areas of immigration, asylum, and judicial affairs.
- Additionally, the Treaty of Lisbon, enacted in 2009, gave the EU more broad powers that included being authorized to sign international treaties, increase border patrol, and other security and enforcement provisions.
- EU’s headquarters is currently located in Brussels, Belgium.
- All European Union Member States coordinate their economic policy-making to support the economic aims of the EU.
- However, a number of Member States have taken a step further by replacing their national currencies with the single currency – the euro. These Member States form the eurozone, officially known as the euro area.
- The eurozone consists of 20 countries in the European Union.
Why in News?
- Eurozone business activity shrank much more than expected in July as demand in the bloc’s dominant services industry declined while factory output fell at the fastest pace since COVID-19 first took hold.
- The decline was broad-based with the euro zone’s two biggest economies–Germany and France–both in contractionary territory and will likely add to fears the bloc will slip back into recession.
- A recession is a significant, widespread, and prolonged downturn in economic activity.
- There is no single definition of recession. A common rule of thumb is that two consecutive quarters of negative gross domestic product (GDP) growth mean recession.