ABSTRACT
The period of "euro divergence", which coincided with the adoption of the single currency, is all but striking. Adoption of the euro led to different developments in central and peripheral countries. The impulse on aggregate demand in the peripheral economies would be consistent with a real appreciation. Trade liberalisation was of particular importance for Portugal in what concerns the textile and clothing sectors, where quantitative restrictions on third country exports to the European Union imposed by the Multi-Fibre Arrangement were progressively lifted from 1995 to 2005 in accordance with the Agreement on Textiles and Clothing. In reality, the budgetary consequences of the crisis wrought dire consequences for some peripheral Eurozone economies. The imbalances of the Portuguese economy are in many essential aspects shared by other peripheral economies in the euro area. To overcome these failures would imply important structural reforms in the Eurozone in what concerns the institutional structure and lead to a greater political union.
