Effects of the economy submerged in society
Introduction
The economy submerged in Europe has more than 2.1 billion euros. Europe faces greater scrutiny as national governments seek to balance budgets while avoiding tax increases and benefits cuts that can hinder economic recovery. The submerged economy nourishes several intertwined factors: the predominance of cash, the lack of transparency around transactions and the limited application of laws.
The submerged economy offers questionable individual benefits at the expense of many factors, resisting the growing digitalization and connectivity of the world and hindering the public good.
Study conducted by. Kearney and Friedrich Schneider
A. Kearney and Friedrich Schneider, professor of economics and president of the Department of Economics of the Johannes Kepler University in Linz, Austria, have joined to study the structure of the economy submerged in Europe and identify measures to reduce it. The study is based on an analysis of the submerged economy within 12 industrial sectors in six focal countries in Europe.
The submerged economy includes legal commercial activities that are carried out outside the reach of government authorities. These activities are generally divided into two categories that remain common throughout Europe.
Legal commercial activities that are carried out outside the reach of government authorities
The work not declared:
Represents approximately two thirds of the submerged economy. Includes salaries that workers and companies do not declare to the Government to avoid taxes or documentation. The unpleasant work is widespread in construction, agriculture and domestic services (such as cleaning, child care, elderly and tutoring).
The other third comes from the sub-registration:
It is when companies, mainly those that handle a lot in cash, such as small stores, bars and taxis, they report only part of their income to avoid part of the tax burden.
The size of the economy submerged in Europe reached a minimum of 10 years in 2013, and is now estimated at 2.15 billion euros. On average throughout Europe, the submerged economy is as large as 18.5 percent of economic activity. Almost two thirds of the submerged economy concentrates on the five largest economic powers in Europe: Germany, France, Italy, Spain and the United Kingdom. However, in Eastern Europe, the submerged economy is much larger in relation to the size of the official economy than in Western Europe. In Austria and Switzerland, the submerged economy is approximately 7 to 8 percent of the official GDP size of those countries, compared to Poland, which has a submerged economy of 95 billion euros, compared to an estimated GDP of 400 400one billion euros, or 24 percent. In the nations of Eastern Europe such as Bulgaria, Croatia, Lithuania and Estonia, the submerged economy is almost 30 percent the size of the official economy.
LESSONS OF THE PAST
The size of the submerged economy correlates strongly with economic cycles. In times of economic recession, increased unemployment, lower income and fears on the future, more people tend to be carried away by ‘shadow activities’, for example, hire additional jobs that are not reported or underestimated sales in stores for stores forto improve. personal finance and compensate for missing sources.
The economic crisis that began in 2008 confirms it. In 2009, the first full impact year, the submerged economy increased by 0.5% in relation to GDP.
The development of the economy submerged in absolute terms in euros with its size in relation to GDP. Although the 2009 increase may not have been massive, it broke a constant long -term trend in which the submerged economy of Europe decreased compared to GDP. The reduction that accompanies the absolute size of the submerged economy is a convincing proof of the depth of the economic decline of the continent. While more individuals sought alternatives to the official economy, the submerged economy could not compensate for the decline of the real economy.
The improvement of economic conditions since 2010 has helped recover this lost land. For 2011, the submerged economy was below the levels prior to the crisis, and in 2013 the submerged economy is expected to be reduced at an absolute low level in relation to GDP. However, the size of this improvement will depend on the speed and the degree of recovery of the economy in the second half of the year.
A ‘three -lane path’ for the future of Europe. The crisis brought marked differences in the development of the submerged economy between the regions. Before 2009, the fight against the submerged economy paid off all parts of Europe. Since 2011, progress in Europe has followed three different roads. In Western Europe, mild economic improvements and a long tradition of efforts to reduce the submerged economy again, maintaining the relatively small submerged economy. In Eastern Europe, where GDP growth is generally high, the submerged economy remains strong, but not as much as before. In southern Europe, progress has been arrested, with minimal reductions in the submerged economy in relation to GDP. The submerged economy of Spain in relation to GDP is almost flat, 18.7 percent in 2008 to 18.6 percent today. In Portugal, the current submerged economy is 19 percent, higher than the brand of 18.7 percent in 2008.
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