ABSTRACT
The crisis of the economy in the EU, which was triggered by the financial melt-down in
2008, by now has lasted for several years, notably in the southern member states. One of
the reasons for this divergence is that the process of economic convergence did not
proceed as was expected with the introduction of the Euro in most member states.
Put simply, in terms of competitiveness, the North is still considerably stronger than the
South. And with the institutionalisation of the EMU and the ‘one-size-fits-all’ policy,
Eurozone member states lost their capacity individually to adapt to changing
circumstances by monetary policy (Scharpf 2013). Based on loans with interest rates
lower than inflation, southern countries such as Greece and Spain featured high growth
rates after the introduction of the Euro, but could no longer react by exchange-rate
depreciation or other protectionist measures when they ran into trouble after 2008 (see also
Price 2013). The liberalisation of the European market did deliberately not provide for this
option, and until 2008 the financial markets, which could have corrected excessive lending
by raising interest rates for less competitive member states of the Eurozone, had been
sleepy.
