ABSTRACT
The Euro Area is still suffering from two crises. The first is the 'Great Recession' following the financial market crisis. As a follow-up to this crisis, a second crisis has developed the so-called sovereign debt crisis of the Euro Area. After the financial market crisis, both the financially unstable banking system and the economic downturn required massive state interventions. The governments went considerably into deficit in order to stabilise the banking system and the economy. On the one hand, wage restraint impacts positively on price competitiveness and increases the contribution of exports on growth. On the other hand, it impacts negatively on domestic demand. Employment as a second main indicator of success or failure of a growth model also shows a segmented development for Germany. Until the Great Recession, employment performed worse than the average of the Euro Area. Now, after the recession, it has caught up and is now close to the average.
