07 February 2011

Competitiveness Pitch

So the Franco-German plan for a "competitiveness pact" ran into opposition at the summit last week. The plan which is meant to cover the eurozone, includes ideas like harmonising corporate tax rates and pushing up retirement ages, which do not seem to me to have much to do with competitiveness.

Leaving aside the issue of how meaningful it is to focus on competitiveness. I thought to check whether there is any evidence that the Eurozone is failing in international competition.

The latest figures show a current accout deficit of 0.4% of GDP. Over the last 4 quarters the current account has varied between a surplus of 0.5% and a deficit of 0.9%. In other words the Eurozone is selling pretty well as much as it buys.

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