The EU and Euro Impacts in Denmark - Case Study Example

THE EU AND EURO IMPACTS IN DENMARK By Students name Course Professor University State Date Introduction. The EU was established in 1957 and the part states primary focus was on building a typical market for exchange. However, as time passed it become clear that close monetary and economic cooperation was required in order to facilitate in the growth of the internal market for the whole European economy, to make more employments, perform better and for more noteworthy flourishing among the Europeans. In 1991 a treaty known as Maastricht treaty on European Union was passed by the member states where it was decided that Europe would have a tough and stable cash for the 21st century. The Euro currency decided then and it still remains single shared currency among the European Union member states (Mongelli, and Vega, 2006). The reason where the Euro was created was because dealing with a single currency creates numerous benefits over the past situation where each member state used a different currency. Furthermore this helps to reduce fluctuation risk and exchange cost and strengthen the market. It also results into an increased closer cooperation between the member states for a currency that is stable and economy to benefits all the parties. However, it is imperative to note that the Euro is not a currency for all EU member states. As a result, this paper seeks to analyse the economic, political, social and cultural effects that EU and euro has impacted on Denmark. The EU and euro on Denmark Economic The EU is based on political and economic context and is aimed at promoting harmony among the European nations through the creation of a solitary market that facilitates free movement of people, goods and services. Denmark citizens have enjoyed an increased level of income for those years that the country has been a member of EU. It is notable that in 2012 over 2 % of the citizens per capita income would have been lost if a single EU market was not available. Some of the economic effects that Denmark has enjoyed includes the following; the presence and removal of non-tariff and availability of free trade has assisted in the reduction of prices and cost among consumers (Plümper, and Troeger, 2006). Through increased trade created by EU Denmark has experienced a rise in employment rates and increased income.EU has boosted the GDP of its member states and which Denmark is one of them. The Euro is in the successive enlargement mode where members’ states are able to reap benefits of a single market. The elimination of the exchange rate risks reduced transaction cost increased trade, competition as well as an enhanced financial integration. The objective of euro adoption also facilitates in sturdy incentives to follow necessary strategies in promoting nominal and actual convergence and counteraction of reform fatigue (Buiter, 2008). The financial crisis exposed Denmark to other vulnerabilities where the overoptimistic prospects about business benefits and family unit income controlled capital inflows and credit development that outperformed sound equilibrium levels. As a result, unsustainability has been experienced and high current account deficits in banks. Credit growth, credits to households and in specific contract advances have had the most element development and frequently prompted unsustainable land bubbles. Foreign-currency-denominated loans have markedly expanded markedly making households and corporations more vulnerable to currency depreciation. Another economic impact in Denmark as far as EU and euro is concerned can be seen for the current economic crisis in the region that has posed novel challenges for national strategies. The impacts of the crisis can be felt through a declining trade reduced financial availability, a house hold wealth that is plummeting, as well as, deteriorating confidence. The EU and more so euro are a membership protects its members and offers a stable anchor that grows the rich condition of financial specialists the crisis uncovered a huge premium on sound residential strategies (Klages, and Holst, 2011). Denmark as a member has experienced a credit boom that has led to comparable vulnerabilities like increased dependence on foreign savings and frail balance sheets in the corporate and household sectors. However, the union is working to restore transparency, stability and confidence within the financial sector where most prominent failings are addressed together within tackling the needs for a profound reform among the supervisory and regulatory system. There new member joining the EU as a result creating novel investment opportunities. This enables the old member states to strengthen their world competition as well as safeguard their domestic jobs (Teigen, 1975). EU enlargement has enabled a country like Denmark to open up new export markets as well as foreign investment offering them a chance to increase their competitiveness and efficiency. In this regard a well-educated workforce is and regulatory environment is availed. This implies despite being a member, as an old member of the EU Denmark enjoys additional benefits assisting it to remain globally competitive and it’s able to boost growth within the EU. Political European harmony whereby Denmark is no longer in logger heads with its neighbor like previously. The special case of common war, for case in Yugoslavia which was starting not part of the EU, Europe has possessed the capacity to overlook the divisions that were excruciating and uncovered in the both world wars. The EU was recognized as a peaceful region and which holds international cooperation (Denis, et al. 2005). This can be justified by a large number of East European countries that have showed interest to join the EU because they feel that it facilitate in their efforts to promote political and economic stability. It is evident that there is a sturdy commitment by the EU towards human rights where discrimination is prevented and the due process of the law is followed. This has been a positive impact to Denmark and makes the EU attractive who wish to share in similar legal and human rights. The criteria of Copenhagen among the EU members has revered duty to human rights, run of law and market economy. The possibility of picking up enrollment of the EU, urge nations to execute human rights enactment. Social The EU and euro has led to the emergence of some characteristics of social effects in Denmark that can be linked with EU and euro. Some of these social demographic are crucial in the exploration of Danish EU attitudes.EU attitudes are gender divided meaning that some Danish men are increasingly pro-European than Danish women. In Denmark the old generations are increasingly pro-European compared to the young generation. The well-educated on the other hand are pro-European (Kyriacou, and Syrichas, 1999). During referendums the issue of who votes yes or no has transformed significantly towards a developing euro-skepticism amongst the Liberal, the Conservative and the Social Democratic voters, which were traditional pro-European parties. Another thing to note is that despite the fact that Denmark I a member of the EU there is no cultural impacts that can be noted (Friis, 2002). This implies that the EU has not had an official language and does not impede the cultural issues of any country. This has helped Denmark to remain as an own country despite of being a member of EU. However, as part of social and cultural impart language barrier has been a barrier in business as Denmark citizens are involved in business with members who speaks different languages. This move affects the feeling of unity among its members. It makes it harder to bring people together. Conclusion. The economic openness degree and the link of incomes is important in the assessment of the net advantages from money union. Nations that sharing abnormal state of pay relationship between themselves will think that its significant to share a solitary money. As a result there are still some improvements proposed like the classification of Eurozone members into diverse income and size groups. Initially, the Maastricht Treaty aimed to have all the EU members at that time of its singing to take part in the common currency. However, certain countries decided not to change or accommodate new currencies and held on their national currencies. These countries include Denmark and others where this kind of decision was reached out through a public voting. Therefore, it is important to conclude that although the benefits enjoyed the country and effects are based on EU members Denmark differentiates itself from numerous other Euro-outsiders and the projected trade impacts coming from the formation of the currency union for Denmark remains questionable. Reference List Buiter, W.H., 2008. Why the United Kingdom should join the eurozone.International finance, 11(3), pp.269-282. Denis, C., Mc Morrow, K., Röger, W. and Veugelers, R., 2005. The Lisbon Strategy and the EU’s structural productivity problem. Economic papers, (221), pp.1-101. Friis, L., 2002. The Battle Over Denmark: Denmark and the European Union.Scandinavian Studies, 74(3), pp.379-396. Klages, S.M. and Holst, L.E.S., 2011. The Euro and trade effects. Kyriacou, G. and Syrichas, G., 1999. EMU and the introduction of the euro: macroeconomic implications for the Cypriot economy. Quarterly Economic Review. Mongelli, F.P. and Vega, J.L., 2006. What effects is EMU having on the euro area and its member countries? An overview. Plümper, T. and Troeger, V.E., 2006. Monetary policy autonomy in European non-euro countries, 1980–2005. European Union Politics, 7(2), pp.213-234. Teigen, R.L., 1975. Monetary and fiscal influences on economic activity: evidence from Denmark, Finland and Norway. The Swedish Journal of Economics, 77(2), pp.149-164. Read More