The Greek crisis, which emerged in May 2010, showed how EU Member States are much more concerned with national issues than EU integration, in particular during times of crisis (Frangakis 2010).2 The lack of coordination and financial solidarity emerged dramatically, and the issue of European imbalances is wrongly regarded as a problem of laziness against effort, virtuous balance against bad discipline, Mediterranean corruption against North European integrity (Cesaratto 2011). This does not help to see the real problem behind the deficit-surplus issue within the EU, which is a single market. A single market (with many imperfections) and a common currency within a non-Optimal Currency Area (OCA) at the very least needs labour coordination, budget centralization and fiscal policy harmonization (Wray 2010). In addition, the strong ‘internal devaluation’ (i.e. wage moderation) that Germany carried out in the past ten years, along with other mercantilist policies, and the cooperation of the European Central Bank (ECB) monetary policies, allowed German exports to increase dramatically (Cesaratto 2011). Such policies were not really in the spirit of EU integration and solidarity. Consequentially, the EU situation today looks fragmented. On one side, Greece and the other Mediterranean countries suffer from the efficiency of North European firms. Free competition and the single market affected the domestic markets in those countries, which were lagging behind in terms of competitiveness and technology at the creation of the Eurozone and the single market. Moreover, the Maastricht criteria and the stability pact appreciated the euro and contributed to the declining foreign competitiveness of South European economies. On another side, the poorer economies in the EU cannot use monetary policies and exchange rate manipulation to gain competitiveness. They are unable to use state aid and firm subsides, nor fiscal policies which are constrained by the Maastricht criteria. Hence, markets have to regulate imbalances despite the fact that labour mobility, single markets and budget centralization are strongly limited in the EU. It follows that surplus and deficit are the two results of the same problem: an imperfect single market and an imperfect currency union. In the EU, Germany’s surplus could not exist without Greece’s deficit (and similar). Greece should accept, within the EU rules, the German market super-competition, which is historically rooted and state supported, despite the fact that she cannot use policies to enhance competitiveness of Greek firms. Unless these imbalances are covered by a central EU plan, it would not be convenient for Greece to accept European monetary union constraints. Besides the problem of imbalance in the current account and of the sovereign debt sustainability, the EU is strongly affected by economic problems such as mass unemployment and slow GDP growth, which make imbalances and debt more severe issues. Among the EU Member States, the situation is very varied. For GDP performance we can divide the 27 Member States into four groups (see Figure 2.2):

1 Group 1 – the worst one – is made up of countries which have experienced a deep recession with a cumulative negative GDP performance during the period from 2007 to 2011 (Greece, Latvia, Ireland, Italy, Denmark, Portugal and Estonia).