Friday, December 9, 2011

Eurozone and European Union - Whats the difference?

With the European debt crises of 2011 making headlines everywhere there seems to be a lot of confusion as to what this means. 

One way to understand the confusion is to examine where the Euro zone and the European Union meets.

There is a difference between the European Union and the Euro zone. The EU is a political union and the Euro zone is a fiscal area where the Euro is used. 

Originally it was hoped that that all members of the EU would use the Euro as its currency and although this has happened in 17 of the member states of the EU, ten member states still don’t use the Euro as its currency.

The Eurozone consists of countries that use the currency of the Euro. The Euro is the sole currency of 17 EU member states and affects some 326 million people.

There are 6 countries that use the Euro that are either outside the EU (Montenegro and Kosovo) or micro states.

The Micro states are:
San Marino
Vatican City

The Euro zone consists of:

1) Andorra (European micro state)
2) Austria
3) Belgium
4) Cyprus
5) Estonia
6) Finland
7) France
8) Germany
9) Greece
10) Ireland
11) Italy
12) Kosovo (outside the EU)
13) Luxembourg
14) Malta
15) Monaco (European micro state)
16) Montenegro (outside the EU)
17) Netherlands
18) Portugal
19) San Marino (European micro state)
20) Slovakia
21) Slovenia
22) Spain
23) Vatican City (European micro state)

The European Union is a group of countries whose governments work together. To be a member of the EU you have to follow the rules in place and in return you get the benefits of joining the group.

Each country in the group pays money to the EU and this money benefits the people of the European Union via business and lifestyle changes. The money is usually raised by local taxes in each country.

(European union map showing Euro and non Euro using members)

There are currently twenty-seven member countries of the European Union (EU). 10 of these countries don’t use the Euro

Austria (€) euro
Belgium (€) euro
Bulgaria (лв) lev
Cyprus (€) euro
Czech Republic (Kč) koruna
Denmark (Kr) Krone
Estonia (€) euro
Finland (€) euro
France (€) euro
Germany (€) euro
Greece (€) euro
Hungary (Ft) Forint
Ireland (€) euro
Italy (€) euro
Latvia (Ls) Lat
Lithuania (Lt) Litas
Luxembourg (€) euro
Malta (€) euro
Netherlands (€) euro
Poland (zł) Zloty
Portugal (€) euro
Romania (lei) New Leu
Slovakia (€) euro
Slovenia (€) euro
Spain (€) euro
Sweden (kr) Krona
United Kingdom (£) Pound

The difference has led to recent fears of a 2 speed Europe or countries within the EU that use the Euro and those that don't.