European Union
Why this matters
Section titled “Why this matters”Taken together, the 27 countries of the European Union produced $21.2 trillion in 2025, more than China (World Bank). But the EU isn’t one country. It has one market and, for most members, one currency, while each country keeps its own government and budget. That mix is the key to understanding Europe’s crises.
What drives it
Section titled “What drives it”The EU is mixed. Households spend about 53% of GDP (World Bank). Inside that average, countries differ a lot: Germany is a big industrial exporter of cars and machinery, while countries like Spain and Greece lean more on services and tourism.
The indicator to watch
Section titled “The indicator to watch”HICP inflation. The ECB says its reference for measuring inflation is the HICP, a consumer price index built with the same method in every EU country (ECB). One shared method matters because the ECB has to judge prices across many different countries with a single interest rate.
Euro area: HICP inflation vs the ECB's 2% goal
Hover for values. The ECB's goal covers the whole euro area; this series keeps the 19 countries of 2015 so it stays comparable over time.
Data as of 2026-08-01 · Source: Eurostat via FRED (euro area of 19 countries, year-over-year change)How the European Central Bank operates
Section titled “How the European Central Bank operates”The European Central Bank (ECB) sets one interest rate for every country that uses the euro. That is 21 of the 27 EU members since Bulgaria joined on 1 January 2026 (ECB). The other six, such as Poland and Sweden, have their own central banks. The ECB aims for 2% inflation and treats undershooting as just as bad as overshooting (ECB).
| Decision body | The Governing Council: the six members of the Executive Board plus the governors of the national central banks of the euro countries (ECB) |
| Meetings | Monetary policy decisions every six weeks, followed by a press conference (ECB) |
| Policy rate | The deposit facility rate: what banks earn on overnight deposits at the ECB. The Governing Council steers its policy stance through it (ECB) |
The numbers on this page cover all 27 EU countries, not only the euro users.
The numbers
Section titled “The numbers”European Union: growth, inflation and jobs since 1990
Yearly figures. Hover for values.
Data as of 2025 · Source: World Bank (unemployment is an ILO modelled estimate)Notice how unemployment rose after 2008 and kept rising until 2013 (11.4%), long after the US had started to recover. Then in 2022, when energy prices soared after Russia invaded Ukraine, inflation jumped to 8.8%. Energy and food caused more than two-thirds of that year’s inflation in the euro area (ECB).
Real-world example: the euro debt crisis
Section titled “Real-world example: the euro debt crisis”In 2010, Greece could no longer borrow at affordable rates, and euro countries and the IMF lent it €110 billion in May of that year (European Commission). Ireland and Portugal soon needed help too. Investors began to fear that the euro itself might break up, and the EU economy shrank again in 2012 (see the chart).
A country that shares a currency can’t cut its own interest rate or let its currency fall to regain competitiveness. The turning point came on 26 July 2012, when ECB President Mario Draghi said the ECB was ready to do “whatever it takes to preserve the euro” (ECB). Borrowing costs for the weaker countries began to fall (ECB research).
Key takeaways
Section titled “Key takeaways”- The EU is 27 economies with one market, and 21 of them share the euro and the ECB’s single interest rate.
- One interest rate can’t fit every member perfectly, which is why the 2010–2012 debt crisis was so hard to fix.
- The ECB targets 2% inflation, the same goal as the Fed and the Bank of Japan.