I enjoy charts. (Calm down, ladies.) This chart is very telling. It starkly shows the benefits and burdens imposed on the Eurozone members by adopting the common currency.
The group of countries that saw the highest growth in income were those with weak currencies and developing economies, Portugal, Spain, Greece and Finland. That’s right, Finland. Before the high tech revolution, Finland was a sleepy backwater known for forestry products with a volatile currency, the markka. The fact that Finland is now the biggest euro malcontent is ironic, as Finland is arguably the biggest winner in the euro sweepstakes.
Ireland should be included in the group above, but its economy crashed harder and earlier than any of the countries in the group. If you changed the sample range from 2000-2008, Ireland’s performance would appear more like the high growth groups.
Let’s take the low countries, Belgium and the Netherlands, next. They have similar economies. Both are small countries who punch above their weight economically with several well-known multinationals. Rich people who work for these multinationals benefited from the common currency, but the poorer half of each country did markedly worse. Low-value labor seems to do poorly when exposed to the international market for labor.
The Germanic countries did the worst in adopting the euro according to this chart losing income across the board. There is another ignored factor here. Both Germany and Austria underwent their own austerity programs in the early aughts, and this cut in government spending surely crimped growth from 2000-2010. I bet if we were to extend the period in question until 2012, I bet that both countries would show income gains.
Italy is its own special case. This country has a well-developed economy, but it tends to be unproductive. Frequent lire devaluations helped keep it competitive, but when it joined the euro it lost the ability to devalue on its own. It also bears mentioning that Italy’s budget growth has been relatively flat during the time period in question.
That brings us to France, which is the only country to experience growth at the extreme ends of the income distribution. I do not have an explanation for France, but who does?