The economic activities of Northern Europe are highly influenced by a number of factors. Some of the main factors that affect Northern Europe economy are the balance of payments, trade balances, interest rates and fiscal balance sheets. A number of economic indicators provide an indication of the state of the nation's economy. One can get an insight into the real state of the economy of the northern European countries by observing the annual growth rates of gross domestic product (GDP), unemployment rate and gross monthly exchange rate.
Economic historians place the birth of democracy in northern Europe at the end of nineteenth century. democracy came to power through a popular revolution that brought a new attitude towards the political parties. After independence, northern Europeans began to draw on the experience of their neighbors for political wisdom. At the turn of the twentieth century, northern European nations were able to overcome the colonial powers. The political unity of these nations helped them attain greater prosperity and freedom.
The North European countries, Austria, Finland, Greece, Italy, Portugal and Spain constitute the “Nordic countries”. These countries have maintained good trading relations with each other and are able to accumulate surplus in the years ahead. Economic growth is expected to reach recession level in coming years due to the excessive use of credit, excessive deficit in the spending and high interest burden.
The excessive use of credit and deficit in the budget is a major cause for the crisis. This excessive use of credit, high interest cost and poor spending discipline has resulted in the massive debts in the last two years. The current growth is limited and will take time to reverse the current trend. This recession will increase unemployment level and further aggravate the debt crisis. As the unemployment level rises, credit card debt will increase proportionately.
If the current recession continues, northern European countries may be facing difficult times when they need external support to tackle the debt problem. The stimulus package that the European Union introduced in the previous year provided a good assistance to the debtors. It provided assistance to financial institutions as well as to individual citizens. The presence of the stimulus package was an exceptional event in the past, which has made the northern countries more stable economically. Moreover, the introduction of debt relief laws by the Federal government has made things easier for the debtors.
The situation is such that any north European country can overcome their economic hardships if they continue with the correct fiscal policy. In order to overcome the problem of excessive debt, the government must . . . . . . provide a good economy which will lead to economic growth. The growth must be broad based and must not just be enjoyed by the debtors only. On the other hand, the debtors too should take care that they do not use the economic situation for the advantage of their creditors.