Introduction The current crisis in the European Union can be a basis for revisiting macro-economic factors affecting the region. The operation and running of businesses in the EU region is faced with many challenges given the current situation. The banking sector and other financial lending institutions are faced with a hard time in financing businesses in the region. This has been necessitated by their reckless lending of finances that eventually led to the current financial crisis. Given the high inflation rates and high unemployment rates in the region, it is very hard for business and people to operate in the EU at the moment. The paper bases its arguments on the various macro economic factors affecting businesses in the region. The objective of the report is to use the macro economic factors within the EU region so as to understand their impact on business operations. Analysis of Economic forces in EU with impacts on firms There are numerous economic forces that impact on the operation of firms in the EU region. The ability by firms to operate successfully depends a lot on the economic activities taking place in a region. The economic activity is bound to increase annually and this is often determined by the economic forces prevailing in the market. For instance, when the economic activity fluctuates then the production costs incurred in the production of goods and offering of services also increase. This is usually caused by such economic forces like the increase in labor costs, capital stock, and advances in technology. Given the current situation in the EU region where the market has been hit by high fluctuation rates, firms are bound to find it hard to carry out businesses. This is because the labour costs, in effect resulting in an increase in the cost of production. Because of this scenario, firms in the region are finding it very hard to sell their products, and this has forced many companies to cut down on their production costs. A reduction in production means that fewer goods and services are produced, and this reduces the real GDP, among other economic measures (Mankiw 2012, p.423). The potential result of this scenario is an economic recession that has been witnessed since mid 2008 in Europe. The economic fluctuations that arise from on a year basis are usually caused by various economic forces. Some of the countries in the Europe which are members of the EU are worse off compared to others. This makes it hard for firms that operate in this region. This is because they have been adversely been affected by the short economic fluctuations are a result of the economic crisis that led to recession in the region. During the recession, the GDP of an economy falls (Manwik 2012, p.424). This contracting period during the business cycle negatively affect business. During this period, the firms face dwindling profits and declining sales as it has been experienced in the region. Most of the firms operating around this region have not been operating in profits and other has been forced to close up their businesses. During this period, the levels of investment declines and the rate of unemployment levels rise. Based on this argument it is imperative to note that economic activity determine the success of business. When the recession hits an economic setting as is the case of EU, international and national trading partners are also affected negatively. For instance, fall of