Potential Dissolution of European Union Could End Single Market and Euro Currency

The European Union (EU) comprises 27 member states that have integrated their economies through the single market and, for 20 of them, the euro currency. Established by the Maastricht Treaty in 1993, the EU aims to promote economic cooperation and political stability in Europe.

Anthony Luzzatto Gardner, a former U.S. ambassador to the EU, addressed the implications of a potential EU dissolution in a Foreign Affairs article.

Gardner states that the end of the European Union would mean the termination of the single market, from which U.S. businesses have derived substantial benefits. The single market, created in 1993, allows for the free movement of goods, services, capital, and people across member states, reducing trade barriers and standardizing regulations.

U.S. companies, including major exporters in sectors like technology, agriculture, and manufacturing, rely on this framework for access to a market of over 440 million consumers.

Additionally, Gardner notes that an EU dissolution would end the euro, the common currency adopted by 20 member states since 1999, which has reduced cross-border transaction costs. The euro eliminates exchange rate risks and simplifies financial transactions within the eurozone, benefiting businesses and consumers by lowering fees and hedging expenses.

Without the euro, countries would revert to national currencies, potentially increasing economic fragmentation and volatility in Europe.

The stakes of an EU breakdown extend beyond Europe to global trade partners like the United States. U.S. exports to the EU totaled $350 billion in 2022, according to U.S. Census Bureau data, with the single market enabling seamless operations for American firms.

Affected parties include multinational corporations, small exporters, and European consumers who benefit from competitive pricing and diverse goods.