We have examined various areas of the five economies in order to obtain a multifaceted picture of their economic performance. There are admittedly slight approximations in some areas. However, despite the greatest efforts of the ECB and the EU, we are almost everywhere a long way from the situation we were in before the euro crisis broke out. In a number of important areas, divergence continues to increase. Only one single parameter, unit labour costs, shows clear progress. There are no signs that economies as a whole are converging or will converge in the future.
Large sections of Europe's political leaders do not even seem to have a full grasp of the problem. Many politicians are actively trying to harmonise social standards in the eurozone. The EU agency Eurofound even uses this argument to promote the EU. However, social parameters are a cost factor that burdens weaker countries more than stronger ones. Alignment of social parameters almost automatically leads to a divergence in economic parameters, as the weak members are deprived of a competitive parameter.
The national economies are continuing to drift apart.
Hopes that a form of "upward" convergence could develop in the eurozone are currently completely unfounded. Convergence is most likely to be seen where Germany falls behind, as "convergence from above". Overall, it has to be said that the euro system has driven countries apart. In the event of a recession, political leaders are likely to face enormous problems.
Reference for the used photo:
- Cover photo: jaimax @ Fotolia.com