PDuring the eurozone crisis, they were given a particularly insulting acronym: “PIGS” (“pigs” in English), for Portugal, Italy, Greece and Spain (“Spain” in English). They were the bad economic students, looked down upon by the supporters of orthodoxy, Germany in the lead. During the tense negotiations of the various relief plans, a layer of preconceptions and clichés did not help: these countries, it is well known, were full of lazy workers, corruption and inefficient bureaucracy.
A decade later, the sick man of Europe is Germany, currently in recession. The countries of the South, which are showing surprisingly robust growth, are taking their revenge. “Pigs have wings”wrote, in November 2023, BCA Research, an investment advisory firm. Between 2019 and 2023, including the Covid-19 pandemic period, Greece and Portugal recorded cumulative growth by almost 6%, Italy by 3.5%, Spain by 2.5%, France by 1.5% and Germany by… 0.7%.
Looking more closely, the catch-up even began in 2017. According to calculations by Capital Economicsan economic research firm, these four peripheral countries have experienced growth higher than Germany by 5 points since that date.
Drastic reduction in unemployment
Of course, this divergence primarily reflects a sudden change in circumstances that would have been very difficult to predict. The German model was based on two pillars: industry, dependent on cheap Russian gas, and exports. The war in Ukraine destroyed the first. The new Cold War between the United States and China has crumbled the second. As for the transition to electric vehicles, it is shaking up one of the most important sectors in the country.
On the other hand, the countries of the South have surfed on the strong surge in tourism, one of their main strengths, after the post-pandemic reopening of economies. The European Union also played a key role with the plan NextGenerationEU, in 2021, a joint loan of some 800 billion euros. If the payments are very slow in Europe, and must last until 2026, they benefit above all the peripheral countries, Italy and Spain being the two main beneficiaries.
The improvement, however, goes deeper than that. The (violent and difficult) labor market reforms have enabled a drastic reduction in unemployment. In Spain, this went from 25% in 2014 to 11.5% today; in Italy, from 13% to 7.5%; in Greece from 26.5% to 10%. The banks have also been cleaned up, even in Italy, where concern has long been recurrent in this area.
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