Competitiveness Gap Widening in Europe, Study Finds

 

STEPHEN CASTLE

LONDON — European economies are diverging in competitiveness, according to a report published Wednesday that highlighted a growing north-south divide as one of the factors at the heart of the continuing euro zone crisis.

The annual rankings of 144 nations, published by the World Economic Forum, show a vast difference between the best- and worst-performing nations in the 17-nation single currency area, with Finland taking third place and Greece languishing in the 96th spot — the lowest in the European Union.

Switzerland, which is not a part of the European Union, takes top place in the global table, with Singapore second, the United States occupying 7th position — down two places from last year — and Canada at 14th. China, in 29th place, is rated the most competitive among large emerging markets. 

The survey comes during a crucial period for the euro zone, with the European Central Bank’s governing council due to meet Thursday and intensive discussions under way among European leaders both about Greece and about broader efforts to stem the debilitating debt crisis. 

The report does not paint a hopeless picture for Europeans, but suggests that high competitiveness is largely confined to the north and west of the continent. That suggests that the desired process of convergence among euro zone economies, expected by the architects of the single currency, has gone into reverse.

“The lack of competitiveness of several of its members is among the root causes of the current difficulties in the euro zone,” the report says. 

The document argues that the origins of the crisis gripping several southern European nations are diverse but adds that “one shared feature at the heart of the current situation in all these economies is their persistent lack of competitiveness and, therefore, their inability to maintain high levels of prosperity.”

It adds, “Overall, low levels of productivity and competitiveness do not warrant the salaries that workers in Southern Europe enjoy and have led to unsustainable imbalances, followed by high and rising unemployment.” 

The study also notes that there is no longer a divide in competitiveness between the 15 older members of the European Union and the 12, mainly ex-Communist, nations that joined the bloc in 2004 and 2007.

Six European nations are among the world’s top ten most competitive, and ten are among the best 20. Several of these, however, are outside the euro zone — Sweden in 4th place, Britain in 8th and Denmark in 12th — while first-place Switzerland and 15th-place Norway are outside the European Union.

The euro zone can boast Netherlands in 5th place, Germany in 6th, Austria in 16th and Belgium in 17th.

France is in 21st place, Spain lies in 36th place, Italy in 42nd, Portugal in 49th. 

“With six of the ten best-performing countries, Northern and Western Europe is a competitiveness hotspot,” the report said. “The assessment is considerably bleaker when looking at Southern and Eastern Europe.

http://www.nytimes.com/2012/09/06/business/global/daily-euro-zone-watch.html?src=recg