Press Release: The impact of the global crisis on competitiveness and current account divergence in the euro area

This special issue of the Quarterly Report on the Euro Area provides a comprehensive assessment of the impact of the crisis on external divergences in the euro area. After a decade of steady divergence, the global economic crisis has triggered a partial rebalancing of current accounts in the euro area. The narrowing of current account differences between Member States has both structural and cyclical causes and could be partially reversed with the recovery. It has so far been associated with only modest correction of past divergence in price competitiveness. As a result, significant adjustment needs continue to exist and call for a comprehensive policy response tailored to the specific needs of each Member State. The crisis has underscored the need for reforms in the euro area and for co-ordination across Member States. A coordinated and ambitious policy response would ease the necessary adjustment processes but would also boost the euro-area's long-term growth prospects. Tackling these challenges is a central plank of the new Europe 2020 strategy for smart, sustainable and inclusive growth.