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Will the "Great Recession" further drift apart the competitiveness in the EU?

Author

Listed:
  • Fritz Breuss

    (WIFO)

Abstract

At its 10th anniversary the EMU had to stand the baptism of fire caused by the „Great Recession“ 2009. By and large it mastered this test. The introduction of the Euro, however, has brought to light the latent weaknesses in competitiveness of some member states of the Euro area, consisting up to now mostly of old EU member states. Shortly after the EU enlargement in 2004 and 2007 Cyprus, Malta, Slovakia and Slovenia introduced the Euro. Out of 27 EU member states already 16 countries belong to the Euro area. In the near future one can expect a further enlargement of the Euro area. The permanent diversion of competitiveness between the new and the old EU member states could, however, evolve into a big problem with respect to the coherence of the enlarged Euro area, pursuing a common monetary policy. Here we focus particularly on the differing competitiveness – measured by the relative unit labour costs or the real exchange rates - within the enlarged union. Conclusions are drawn with respect to the current "Great Recession".

Suggested Citation

  • Fritz Breuss, 2009. "Will the "Great Recession" further drift apart the competitiveness in the EU?," FIW Policy Brief series 001, FIW.
    • Handle: RePEc:wsr:pbrief:y:2009:i:001
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    More about this item

    Keywords

    EMU; International Competitiveness; Great Recession;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F15 - International Economics - - Trade - - - Economic Integration
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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