La lettre du réseau Euren
Les neuf instituts du réseau Euren mettent en commun dans une newsletter bimestrielle leurs analyses sur différents aspects de la situation économique de la zone euro : marché du travail, finances publiques, etc. L’accent est mis sur les comparaisons entre pays. Deux fois par an, le réseau présente un exercice commun de prévision pour la zone euro .
An implicit objective of introducing a single currency in Europe was to ensure that living standards in the whole euro area will converge in the medium and long-term. The Euro Area has now to cope with deep and long-lasting disparities.
The financial crisis revealed that the convergence process whithin EMU was built on deep imbalances such as unprecedented current account deficits (11 % of GDP in Greece in 2007, 9 % in Spain). Those imbalances were illustrating a fast growing internal demand through easy access to credit and thus a sharp increase in the level of both public and private debt.
The direct effects of the financial turmoil, in particular the post-crisis fiscal tightening, slowed down the convergence process. Even more, opposite to the previous period, living standards are now diverging. Though current account deficits have been significantly reduced or have even disappeared as it is the case for Spain, this reduction is mostly caused by a decrease of imports rather than by an improvement of export competitiveness of these economies.
The soundness of this improvement and its ability to ensure a more stable and strong economic growth will be now highly dependent on the evolution of factors determining competitiveness. Those factors are, in a first round, cost of labour and cost of capital. A positive point is that the gap between unit labour costs in the Euro area economies has already narrowed.As regards to capital cost, the process is still much more a diverging than a converging one.
In a longer term perspective, the reduction of external imbalances will be highly dependent of the evolution of the factors of production.The Euro area has to gradually switch its focus from the short-term goal of overcoming the crisis and fighting against weaknesses and shortcomings to an emphasis on targets such as the enhancement of economic activities for ensuring stable and strong economic growth in the future.
Chaque automne les instituts membres du réseau EUREN , présentent des prévisions à court terme pour les finances publiques de leur pays. Cette note rassemble leurs contributions (dont celle de Coe-Rexecode sur la France) et les compare aux prévisions de la Commission européenne.
In autumn the EUREN institutes traditionally present their outlook on public finances in their home countries.
Focussing on the change of the budget balance over time, it becomes evident what progress has been made in consolidation. In the Euro area budget deficit decreased from more than 6% relative to GDP to about 3%. At the moment it even looks like the outcome for 2012 might be even somewhat better than expected. Between summer and autumn the commission revised its forecast of the deficit in 2012 slightly downward. The projections from the EUREN institutes suggest that the result could be even somewhat better. At least in many countries the deficit forecast is below the commission’s expectation, even if only slightly.
For 2013, compared to summer, the EC revised its forecast for the Euro area to the negative side. But according to the latest projections of the EUREN institutes, the outlook for 2013 again looks somewhat brighter, at least for the most countries – the only exception is Italy. However, in the current situation it is extremely difficult to say how budget balances will evolve.
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