FOCUS 18-12-2012: Labour costs across the Euro area
Euro area labour costs converging, but imbalances persist
The euro area crisis finds its roots in the credit booms seen in many countries following the introduction of the euro in 1999. Easy credit led to strong growth in a range of sectors, notably housing, as well as higher levels of public spending. Inflation in these over-heating economies was higher than the euro area as a whole. Rising prices led to rising costs and a loss of international competiveness.