France and Italy "attacked" by Germany and Spain

Since the creation of the euro, two countries (Germany and Spain) have carried out an internal devaluation (reduced their labour costs) at the expense of France and Italy: Germany from 1999 to 2010, and Spain from 2009 to 2018. An internal devaluation is justified in a currency area if it corrects a cost competitiveness disadvantage, but not if it creates a cost competitiveness advantage. Looking at the internal devaluations of Germany and Spain, it is clear that they have go ne too far and that they have result ed in an abnormal deterioration in the other countries’ cost competitiveness. As a consequence of these aggressive internal devaluations by Germany and Spain, France and Italy now have poor cost competitiveness given their level of product sophistication, and are in a difficult situation. Either France and Italy will also carry out an internal devaluation, which is very unlikely, or deindustrialisation will continue in these two countries. Therefore, it ought to be possible to "calibrate" internal devaluations according to a country's real need for an improvement in its competitiveness.