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Symposium 2013

Solution for Designing a Stable Euroland: The Corporate Perspective

The Challenge

It is obvious by now that the German economy is not immune to the on-going crisis: A severe drop in exports to the rest of the euro zone is hurting manufacturing. At the same time a combination of lar ...

It is obvious by now that the German economy is not immune to the on-going crisis: A severe drop in exports to the rest of the euro zone is hurting manufacturing. At the same time a combination of large-scale immigration and of capital inflows makes Germany look like a beneficiary of the gloom elsewhere. While the negative economic effects have so far been largely offset by rising domestic demand and exports to countries outside Europe, the longer-term consequences of the crisis may be severe: Economically, Germany will have difficulties to strive in a Europe in perma-crisis. Politically, Germany faces adverse reactions for the austerity it imposes on weaker partner countries.

Improve eurozone competiveness and productivity

The loss of competitiveness of various countries is one of the root causes of the eurozone crisis. During the boom years of the early 2000s especially, younger people were drawn into the buoyant construction sector, hindering them from getting a higher-quality education that would have enabled them to work in more productive parts of the economy. It is of the utmost importance to retrain the unemployed and to guide them back to labor markets. It is a prerequisite not only for countries to get back on the growth track. And it is a necessity to keep social tensions and political instability from worsening. A European Union-funded 20 billion euro program could counter youth unemployment. Moreover, red tape restraining entrepreneurship should be cut and market liberalisation and integration should be enhanced.

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