Is the European Union Slipping into a Recession?

Despite efforts to improve the state of the economy worldwide, including the European Union, geopolitical issues have dictated otherwise, causing various countries’ stocks to slip and create an increased amount of worry. While most analysts believed the European Union was starting to see a comeback, the lowering numbers have shocked them, and they believe the geopolitical issues have a direct effect.

Despite efforts to improve the state of the economy worldwide, including the European Union, geopolitical issues have dictated otherwise, causing various countries’ stocks to slip and create an increased amount of worry. While most analysts believed the European Union was starting to see a comeback, the lowering numbers have shocked them, and they believe the geopolitical issues have a direct effect.

Fortunately, many countries that had been in economical danger in recent years have begun to pull out, only to see new countries slip in. That being said, Italy and Germany now seem to be hit the hardest by both geopolitical and economic events, especially in the realms of manufacturing.

The Geopolitical Effect

Even though only a handful of events are occurring close to the European Union, the uncertain state of geopolitical events is creating a direct effect. With tensions continuing to rise in Ukraine and the Middle East, the European Union is left wondering what will happen next, and how directly they will be affected. Even now, the euro has a reached an all-time high of $1.3410, which is leading to a smaller account surplus. Based on these few factors alone, analysts are realizing that the European Union as a whole may be slipping into a recession.

Still most notable among the numbers being released from the European Union are those from Italy and Germany, both of which are surprising based on their recent months. Instead of improving as experts assumed was occurring, these two countries are finding it more difficult to maintain the necessary economy. Once again, analysts blame the geopolitical crisis occurring between Ukraine and Russia to cause the manufacturing fall.

How the European Union is Reacting

Instead of succumbing to a recession, the European Union is doing everything they know in order to stay afloat, even if that means setting numbers at record lows for their economy. With Italy’s GDP falling 0.2% in the second quarter and central EU factories falling 3.2% almost on a monthly basis, the European Central Bank is keeping its benchmark at the record low of 0.15%. Although it is believed the bank plans on continuing the monetary stimulus, the European bonds as a whole have remained flat or are declining.

But these countries in Europe still have not lowered taxes like they should nor have they taken the foot off the job killing regulations which their environmentalists have imposed on their own businesses. On top of this, all these countries have socialized heath care which only contributes to a poor economy. Socialized health care is highly expensive.

Another aspect that hurts these countries is that they do not invest in their militaries enough to even satisfy NATO requirements. This makes them weak in the eyes of Russia who remains an aggressive nation.

Cross Your Fingers

Despite such historic lows, analysts, and the European Union, hope to once again see an improvement in numbers in hopes to build back up both the bonds and European stocks, as well as improve the ration of the euro to the dollar. While some countries continue to slip closer towards recession, others, such as France, are still a rise in numbers that is giving analysts hope. In fact, the 1.3% rise in industrial production caused a 1.6% rise in manufacturing, creating the most positive numbers for the second quarter. Between the positive and negative, experts are hoping that the European Union stays out of a recession