November 2024: Germany supports the EMU - to its own detriment

Behind this lethargy, among other factors, is an aspect that is rarely discussed in public: Germany's competitiveness, measured by the development of unit labor costs, has deteriorated significantly for years (see right-hand chart)! Since 2010, Germany has shown the worst development within the EMU - in a reversal of the picture from 2000 to 2010 (see left chart).

This sends an interesting message, because: The euro crisis from 2009 onwards was primarily triggered by the enormous divergences in the EMU (see left chart). Since then, Germany has apparently tried to stabilize the monetary union on its own: Primarily by persistently worsening its own competitiveness relative to other EMU countries.

This approach actually reduces the internal tensions of the monetary union - but at a very high price for Germany!