The euro-zone countries’ relative performances can be explained by internal devaluations

Most of the relative performances of the major euro-zone countries can be explained by their different attitudes towards internal devaluations (downward adjustments in labour costs): Germany benefited from its internal devaluation from 2000 to 2005. But today the benefits have disappeared, and the question is whether Germany will carry out another one; Spain is still benefiting from the internal devaluation it has carried out since 2008; France and Italy are suffering from their refusal to implement an internal devaluation and, accordingly, the continuous decline in their cost competitiveness.