In 2017, Jeroen Dijsselbloem, then president of the Eurogroup and Minister of Finance of the Netherlands, accused the countries of southern Europe ( PIGS) to have as “cups and women” as a priority. After all, you can and more.
Still a few years ago, the PIGS (Portugal, Italy, Greece and Spain – in an acronym, which in English means “pigs”, created to throw out the bad economic performance of the southern countries) problematic children of the European Union (EU) and the eurozone.
In 2017, a German newspaper about the financial aid from northern countries to the southern countries in times of crisis, Jeroen Dijsselbloem criticized the way of being of the southern Europeans.
“During the euro crisis, northern countries were jointly and severally with countries affected by the crisis. As a social democrat I consider solidarity extremely important. But those who demand it also have obligations. I can’t spend all my money on alcohol and women And then ask for help, ”said the then Minister of Finance of the Netherlands.
But The scenario changed. Recently, at the Davos World Economic Forum, the Spanish Prime Minister Pedro Sánchez He said, quoted by the southern we, we can also contribute solutions to common problems. ”
The latest Eurostat data confirm that Portugal and Spain In 2024 they had one, assuming the driving role of the eurozone economy, tourism ride, immigration and lower energy costs – in a path that economists believe they will maintain.
Germany creates South-North Division
From a Pan-European perspective, The situation is not encouraging: The economy of the eurozone is stagnant.
The Gross Domestic Product (GDP) of the region remained at the 2024 quarter and fourth quarter, the EU statistics office, Eurostat, said in late January. In the second quarter, there was a growth of 0.4%.
Many experts agree that main reason For this situation is the Porsely Persistent Economic Performance of Germany. In Europe’s largest economy, GDP registered a 0.2% contraction in the fourth quarter, as will happen throughout 2024.
“Germany is getting more and more behind”these Alexander Krügerprivate bank economist Hauck Aufhäuser Lampe, to the Reuters news agency.
And, on the contrary, the countries once considered problematic are taking off. Are Southern countries capable of assuming the role of locomotive in Europe in the future?
Compared to the failure of the Franco-German axis, Spain and Portugal were responsible for 50% of the growth of the eurozone in the last quarter.
According to data released by Eurostat, the Eurozone Gross Domestic Product (GDP) increased by 0.7% in 2024 and the European Union 0.8%.
Among the eurozone countries, Portugal presented, in the fourth quarter of 2024, the third largest homologous growth in GDP (2.7%), after Lithuania (3.6%) and Spain (3.5%) and the Larger in quarterly variation (1.5%), with Spain in third (0.8%).
On the other hand, the economies of Germany and Austria were the most retreated in the homologous variation, with a contraction of 0.2%. In the quarterly variation, the largest breaks were observed in Ireland, Germany and France.
Gabriel Felbermayrdirector of the Austrian Institute for Economic Research (Wifo), however, considered in statements to Deutsche Welle, that the southern countries “are simply too small from an economic point of view“.
Germany and France “already represent more than 50% of the Eurozone GDP; This industrially strong Northern Block includes countries such as Austria, Slovenia, Slovakia and also the Netherlands, ”according to the economist. They are not the only ones affected: “EU countries not belonging to the Eurozone, especially the Czech Republic and, to some extent, Poland are also suffering from the weakness of the EU industrial nucleus.
High energy prices
What makes Southern countries so strong and others seem so fragile? For the economist Hans-Werner Sinnformer director of the IFO Institute in Munich, this is due to external reasons and political decisions: “In recent years, Germany has suffered a lot from the energy crisis, caused by a combination of war [na Ucrânia] and self-inflicted energy scarcity. ”
In particular, the expected transition from fossil fuels to green energy sources. In doing so, “EU and Germany have lost their sense of proportions and balance”.
“Because of these interventions, our country now has the highest electricity prices in the world,” he added.
According to Sinn, the chemical industry, in particular, is suffering from it. Germany’s main sector, the automotive industry, is also under heavy pressure: “the consumer rules for the EU fleets have stole competitiveness to the automotive industry.”
Geographic Advantages
Felbermayr sees the situation similarly. In the southern countries, the tourism and agriculture play a more important rolewhere there is “a significantly lower industrial quota in the total value chain.”
Increasing energy prices throughout Europe, commercial wars, the challenges of decarbonization: all this affects less south than the north. ”
In addition, southern countries have their own advantage: since 2010, their rates of inflation have been lower than those in the north. “This has increased its competitiveness. The reform initiatives that followed the eurozone debt crisis gave their fruits. The same can be said of Greece, Spain and Portugal. ”
There is no light at the bottom of the economic tunnel. At best, an anmemic ascending movement is emerging, commented Commerzbank chief economist, Jörg creamsReuters’ news agency: “The deep structural crisis of the sector and Donald Trump’s tariff threats are dragging everything down.”
The US President also threatens Europe with surcharges, which would particularly afford Germany, dependent on exports.
Recognized danger, danger avoided?
“So far, there are no signs of recovery,” confirms Sebastian DullienDirector of the Institute of Macroeconomics and Research of the Business Cycle (IMK).
The director cites several reasons for the current crisis of the German economy, including “ aggressive industrial policy in Chinawhich exerts pressure on exports ”.
“In addition, the European Central Bank interest ratesstill high taking into account the current economic situation, they slow the investment, ”he added.
However, the hope that this awareness is the first step for an improvement is maintained.
The German Minister of the Economy, Robert Habeckseems to have come to this conclusion. In the world economic forum, said that “to some extent, we are ignoring that this is not a short -term crisis, but of a structural crisis“.
This is particularly evident in industry, which is debated with the high prices of electricity. Foreign trade, which is important to Germany, is weakening and the state of mind of consumers is deteriorating. “We have to reinvent our business model,” says Haback.
What is needed now?
The European Commission also provides for a slight economic recovery in the eurozone and a growth of 1.3% in 2025. European Central Bank, which, according to experts, is about to download interest rates, should adopt new reduction measures throughout the year.
Gabriel Felbermayr does not consider the current relationship of forces unusual between northern and southern countries. “Sometimes the north, which is strong in industry, is ahead, and sometimes southern countries, which are strong in services. It’s no different in other great economies, like the United States. ”
For the director of Wifo, it is essential that “the North will advance the necessary reforms for greater competitiveness, but that the south does not give up”: “It is equally important that the domestic market – which is also a vehicle to balance the different regions – – become stronger again. ”
