Germany: Crisis what crisis?
Why has Germany been so resistant towards signing off on more official help for Greece and the rest of the eurozone strugglers? The usual answer given by German politicians is a sort of moral hazard argument. That say they are afraid the peripheral countries won’t reform their economies if they get lots of assistance.
But I suspect that there’s another, perhaps more important, factor here too. And that is that Germany does not share their economic pain and thus does not feel the urgency of the situation.
The graph below shows that GDP in Germany has recovered since the 2008 crisis broke. But the economies of Italy, Portugal and Spain are still well below pre-crisis output. Ireland and Greece have fallen by still more. The drop in Greek output has been extraordinary.
Germany has diverged in other respects too. German unemployment hit a record low of 6.8 per cent in January. By contrast, the jobless rate in Greece is 20 per cent. In Spain it is 23 per cent. It is 14.5 per cent in Ireland. See here:
Youth unemployment in the eurozone periphery is also alarmingly high. Unemployment among 16-24 year olds is 45 per cent in Greece and almost 50 per cent in Spain. Yet in Germany the rate is just 8 per cent. See here (courtesy of Reuters):
A depressing thought: perhaps what is required to make a currency union sustainable is equality of economic misery across member states.Tagged in: crisis, greece, ireland, Italy, pain, Portugal, spain, unemployment
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