PROBLÉMY EUROZÓNY

PROBLÉMY EUROZÓNY

Jiří Schwarz

8. ročník Mezinárodní Baťovy konference Univerzita Tomáše Bati ve Zlíně

19. dubna 2012

• EU15: Belgium (BE), Greece (EL), Luxembourg (LU), Denmark (DK), Spain (ES), Netherlands (NL), Germany (DE), France (FR), Portugal (PT), Ireland (IE), Italy (IT), United Kingdom (UK), Austria (AT), Finland (FI), Sweden (SE)

• EA12: Belgium (BE), Spain (ES), Ireland (IE), Italy (IT), Luxembourg (LU), Netherlands (NL), Germany (DE), Finland (FI), France (FR), Austria (AT), Portugal (PT), Greece (EL)

• EA17: Belgium (BE), Spain (ES), Ireland (IE), Italy (IT), Luxembourg (LU), Netherlands (NL), Germany (DE), Finland (FI), France (FR), Austria (AT), Portugal (PT), Greece (EL), Slovenia (SI), Cyprus (CY), Malta (MT), Slovakia (SK), Estonia (EE)

I. Welfare state

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

GDP growth rates (at market prices)

Germany Ireland Greece SpainCzech Republic Slovakia EU15

Perc

enta

ge ch

ange

on

prev

ious

per

iod

Source: Eurostat

Introduction of the EURO

Greece joins EMU

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

GDP in PPS per inhabitant (at market prices)

Germany Ireland GreeceSpain Czech Republic EU15

Purc

hasi

ng P

ower

Sta

ndar

d pe

r inh

abita

nt

Source: Eurostat

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110.0

5.0

10.0

15.0

20.0

25.0

Unemployment


Annu

al a

vera

ge (%

)

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

Long-term unemployment


Perc

enta

ge o

f the

tota

l une

mpl

oym

ent

Source: OECD

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-20

-15

-10

-5

0

5

10

Current account

Germany Ireland GreeceSpain Italy Czech Republic

Perc

enta

ge o

f GDP

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000

Current account


Mill

ions

of e

uro

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-250,000

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

Financial account


Mill

ions

of e

uro

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

Net saving


Perc

enta

ge o

f GDP

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20138.0

13.0

18.0

23.0

28.0

33.0

38.0

Gross fixed capital formation


Perc

enta

ge o

f GDP

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-10.0

-5.0

0.0

5.0

10.0

15.0

Nominal unit labour cost growth


Perc

enta

ge ch

ange

on

prev

ious

per

iod

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Real unit labour cost growth


Perc

enta

ge ch

ange

on

prev

ious

per

iod

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201190.0

95.0

100.0

105.0

110.0

115.0

120.0

Real unit labour cost

Germany Ireland GreeceSpain EU15 Czech Republic

Inde

x, 2

000=

100

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201170.0

80.0

90.0

100.0

110.0

120.0

130.0

140.0

150.0

Nominal unit labour cost

Germany Ireland GreeceSpain EU15 Czech Republic

Inde

x, 2

000=

100

Source: OECD

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201010000

20000

30000

40000

50000

60000

70000

80000

Labour productivity per person employed

Germany Ireland Greece SpainItaly Czech republic Slovak republic

Euro

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201190.0

100.0

110.0

120.0

130.0

140.0

150.0

160.0

170.0

180.0

Labour productivity per person employed

Germany Ireland Greece SpainEU15 Czech Republic Slovakia

Inde

x, 1

996=

100

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201360.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

Final consumption expenditure


Perc

enta

ge o

f GDP

• Final consumption expenditure is expenditure by resident institutional units - including households and enterprises whose main economic centre of interest is in that economic territory - on goods or services that are used for the direct satisfaction of individual needs or wants or the collective needs of members of the community.

• A resident institutional unit is an institutional unit that is resident because it has a centre of economic interest in the economic territory of a country (or a grouping like the European Union (EU) or the euro area).

• The sectors of an economy are composed of two main types of institutional units:– households and individuals who make up a household;– legal and social entities, such as corporations and quasi-corporations (e.g.

branches of foreign direct investors), non-profit institutions, and the government of that economy.

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Resident_institutional_unit

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Household

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Enterprise

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Economic_territory

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:European_Union_(EU)

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Euro_area

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Household

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201040.0

45.0

50.0

55.0

60.0

65.0

70.0

75.0

80.0

Final consumption expenditure of households


Perc

enta

ge o

f GDP

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201345.0

50.0

55.0

60.0

65.0

70.0

75.0

80.0

Private final consumption expenditure


Perc

enta

ge o

f GDP

• Private final consumption expenditure includes NPISH's (non-profit institutions serving households) and households' final consumption expenditure. The household sector (ESA95, 2.75) consists of individuals or groups of individuals as consumers and possibly also as entrepreneurs producing market goods and non-financial and financial services (market producers) provided that, in the latter case, the corresponding activities are not those of separate entities treated as quasi-corporations. It also includes individuals or groups of individuals as producers of goods or non-financial services for exclusively own final use. Non-profit institutions serving households (NPISH, ESA95, 3.78 and 2.87) are separate legal entities serving households. They include for example trade unions, professional societies, political parties, churches, charities, sports clubs etc.

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0

100.0

200.0

300.0

400.0

500.0

600.0

Non-financial corporations´ financial liabilities

Germany Ireland Greece SpainItaly Czech Republic Slovakia

Perc

enta

ge o

f GDP

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

Financial liabilities of households

Germany Ireland Greece SpainItaly Czech Republic Slovakia

Perc

enta

ge o

f GDP

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

Private debt


Perc

enta

ge o

f GDP

II. Inability of governments to cut expenses

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

Government debt

Germany Ireland GreeceSpain Czech Republic EA17

Perc

enta

ge o

f GDP

Source: Eurostat

Maastricht criteria:Debt max 60% of GDP

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201030.0

32.0

34.0

36.0

38.0

40.0

42.0

44.0

46.0

48.0

Government revenue


Perc

enta

ge o

f GDP

Source: Eurostat

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201030.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

70.0

Government expenditure


Perc

enta

ge o

f GDP

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-31.0

-26.0

-21.0

-16.0

-11.0

-6.0

-1.0

4.0

Government deficit


Perc

enta

ge o

f GDP

Source: Eurostat

Maastricht criteria:Deficit max 3% of GDP

III. Monetary policy of ECB

Source: Eurostat

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Inflation

Germany Ireland Greece SpainCzech Republic Slovakia EA12

Annu

al a

vera

ge ra

te o

f cha

nge

Source: ECB, Statistical Data Warehouse

1998Dec 1999Jun 2000Jan 2001Dec2002Apr 2002Oct2003May2004Jun 2005Jan 2006Dec2007Apr 2007Oct2008May2009Jun 2010Jan 2011Dec 2012Jan-2

0

2

4

6

8

10

12

14

Monetary aggregate M3

M3

Perc

enta

ge ch

ange

Source: ECB, Statistical Data Warehouse

1/1/1999

1/6/1999

1/11/1

999

1/4/2000

1/9/2000

1/2/2001

1/7/2001

1/12/2001

1/5/2002

1/10/2

002

1/3/2003

1/8/2003

1/1/2004

1/6/2004

1/11/2

004

1/4/2005

1/9/2005

1/2/2006

1/7/2006

1/12/2006

1/5/2007

1/10/2

007

1/3/2008

1/8/2008

1/1/2009

1/6/2009

1/11/2

009

1/4/2010

1/9/2010

1/2/2011

1/7/2011

1/12/2

0110.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Key ECB interest rates

Deposit facility Marginal lending facilityMain refinancing operations - fixed rate tenders Main refinancing operations - variable rate tenders

Perc

ent p

er a

nnum

Source: OANDA

1/12/1998

1/5/1999

1/10/1999

1/3/2000

1/8/2000

1/1/2001

1/6/2001

1/11/2

001

1/4/2002

1/9/2002

1/2/2003

1/7/2003

1/12/2

003

1/5/2004

1/10/2

004

1/3/2005

1/8/2005

1/1/2006

1/6/2006

1/11/2

006

1/4/2007

1/9/2007

1/2/2008

1/7/2008

1/12/2

008

1/5/2009

1/10/2

009

1/3/2010

1/8/2010

1/1/2011

1/6/2011

1/11/2

0110.600000000000001

0.700000000000001

0.800000000000001

0.900000000000001

1

1.1

1.2

1.3

1.4

1.5

1.6

EUR/USD

EUR/USD

• M3 = Currency in circulation + Overnight deposits + Deposits with an agreed maturity up to 2 years + Deposits redeemable at a period of notice up to 3 months + Repurchase agreements + Money market fund (MMF) shares/units + Debt securities up to 2 years

• Broad money (M3) comprises M2 and marketable instruments issued by the MFI sector. Certain money market instruments, in particular money market fund (MMF) shares/units and repurchase agreements are included in this aggregate. A high degree of liquidity and price certainty make these instruments close substitutes for deposits. As a result of their inclusion, M3 is less affected by substitution between various liquid asset categories than narrower definitions of money, and is therefore more stable.

Source: Ángel Martín Oro: FREE MARKET IS NOT TO BE BLAMED FOR THE PRIVATE DEBT BUBBLE: THE CASE OF SPAIN

Growth rate of M3 in Spain and in the EMU

Source: Ángel Martín Oro: FREE MARKET IS NOT TO BE BLAMED FOR THE PRIVATE DEBT BUBBLE: THE CASE OF SPAIN

Interest rates and credit to the housing sector in Spain (1993-2008)

Credit to housing Interest rates

Source: Eurostat

1993Q1

1993Q3

1994Q1

1994Q3

1995Q1

1995Q3

1996Q1

1996Q3

1997Q1

1997Q3

1998Q1

1998Q3

1999Q1

1999Q3

2000Q1

2000Q3

2001Q1

2001Q3

2002Q1

2002Q3

2003Q1

2003Q3

2004Q1

2004Q3

2005Q1

2005Q3

2006Q1

2006Q3

2007Q1

2007Q3

2008Q1

2008Q3

2009Q1

2009Q3

2010Q1

2010Q3

2011Q1

2011Q30.00

5.00

10.00

15.00

20.00

25.00

Interest rates on long-term government bonds

Belgium Germany Ireland Greece Spain France ItalyLuxembourg Netherlands Austria Portugal Slovenia Slovakia Finland

Source: BIS Locational banking statistics

1994-Q1

1994-Q3

1995-Q1

1995-Q3

1996-Q1

1996-Q3

1997-Q1

1997-Q3

1998-Q1

1998-Q3

1999-Q1

1999-Q3

2000-Q1

2000-Q3

2001-Q1

2001-Q3

2002-Q1

2002-Q3

2003-Q1

2003-Q3

2004-Q1

2004-Q3

2005-Q1

2005-Q3

2006-Q1

2006-Q3

2007-Q1

2007-Q3

2008-Q1

2008-Q3

2009-Q1

2009-Q3

2010-Q1

2010-Q3

2011-Q1

2011-Q3

0

5000000

10000000

15000000

20000000

25000000

International positions of EA banks: Claims on all sectors

Euro area

Mill

ions

of U

S do

llars

Source: BIS Locational banking statistics

1994-Q1

1994-Q3

1995-Q1

1995-Q3

1996-Q1

1996-Q3

1997-Q1

1997-Q3

1998-Q1

1998-Q3

1999-Q1

1999-Q3

2000-Q1

2000-Q3

2001-Q1

2001-Q3

2002-Q1

2002-Q3

2003-Q1

2003-Q3

2004-Q1

2004-Q3

2005-Q1

2005-Q3

2006-Q1

2006-Q3

2007-Q1

2007-Q3

2008-Q1

2008-Q3

2009-Q1

2009-Q3

2010-Q1

2010-Q3

2011-Q1

2011-Q3

0

5000000

10000000

15000000

20000000

25000000

International positions of EA banks: Claims on all sectors, liabilities to all sectors

Liabilities Claims

Mill

ions

of U

S do

llars

Core: Belgium, France, Germany, NetherlandsPeriphery: Portugal, Ireland, Italy, Greece, Spain

Source: BIS Consolidated BankStatistics

2000-Q1

2000-Q3

2001-Q1

2001-Q3

2002-Q1

2002-Q3

2003-Q1

2003-Q3

2004-Q1

2004-Q3

2005-Q1

2005-Q3

2006-Q1

2006-Q3

2007-Q1

2007-Q3

2008-Q1

2008-Q3

2009-Q1

2009-Q3

2010-Q1

2010-Q3

2011-Q1

2011-Q3

0

500000

1000000

1500000

2000000

2500000

3000000

Gross cross-border bank claims

Core-to-periphery Core-to-core Periphery-to-periphery Periphery-to-core

Mill

ions

of U

S do

llars

Source: BIS Consolidated Statistics, Ultimate Risk Basis

2005-Q1

2005-Q2

2005-Q3

2005-Q4

2006-Q1

2006-Q2

2006-Q3

2006-Q4

2007-Q1

2007-Q2

2007-Q3

2007-Q4

2008-Q1

2008-Q2

2008-Q3

2008-Q4

2009-Q1

2009-Q2

2009-Q3

2009-Q4

2010-Q1

2010-Q2

2010-Q3

2010-Q4

2011-Q1

2011-Q2

2011-Q3

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

Exposure of core banks on periphery (gross claims)

Belgium German France Netherlands

Mill

ions

of U

S do

llars

Source: ECB,Monetary, financial markets and balance of payments statistics

Q1-2003

Q3-2003

Q1-2004

Q3-2004

Q1-2005

Q3-2005

Q1-2006

Q3-2006

Q1-2007

Q3-2007

Q1-2008

Q3-2008

Q1-2009

Q3-2009

Q1-2010

Q3-2010

Q1-2011

Q3-2011

0

100

200

300

400

500

600

700

800

900

1000

1000

1200

1400

1600

1800

2000

2200

2400

Securities and loands held by EA banks, cross-border positions

Total securities Up to 1 year 1 to 2 years Over 2 years Loans

Billi

ons o

f Eur

o

Billi

ons o

f Eur

o

Source: Lazard Insights: The European Debt Crisis, Quantitative Easing, Basel III: An Outlook for 2011

Source: Bloomberg

5Y Credit Default Swaps

Source: Boone, Johnson: Europe on the Brink (2011)

5Y Credit Default Swaps

IV. The case of Ireland

Source: Eurostat

1993Q1

1993Q4

1994Q3

1995Q2

1996Q1

1996Q4

1997Q3

1998Q2

1999Q1

1999Q4

2000Q3

2001Q2

2002Q1

2002Q4

2003Q3

2004Q2

2005Q1

2005Q4

2006Q3

2007Q2

2008Q1

2008Q4

2009Q3

2010Q2

2011Q1

2011Q42

3

4

5

6

7

8

9

10

11

Ireland: Interest rates on long-term government bonds

Germany Ireland

Source: CSO

1991Q1

1991Q4

1992Q3

1993Q2

1994Q1

1994Q4

1995Q3

1996Q2

1997Q1

1997Q4

1998Q3

1999Q2

2000Q1

2000Q4

2001Q3

2002Q2

2003Q1

2003Q4

2004Q3

2005Q2

2006Q1

2006Q4

2007Q3

2008Q2

2009Q1

2009Q4

2010Q30

50000

100000

150000

200000

250000

300000

350000

Ireland: New House Prices

New House Prices (Euro)

Euro

Source: CSO

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

Ireland: Annual House Completions

Annual House Completions

Source: CSO: Construction and Housing in Ireland (2008 Edition), DKM

House completions per 1,000 of population 2007

Source: Dr. Alan Aherane: Ireland´s Economic Crisis: Implications for the Labour Market (2010)

Ireland: Housing investment as percentage of GDP

Source: OECD

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20106

7

8

9

10

11

12

13

14

Ireland: Construction as share of total employment


Perc

enta

ge o

f the

tota

l em

ploy

men

t

Source: CSO: Construction and Housing in Ireland (2008 Edition), Eurostat

Construction as share of total employment 2007

Source: John A. Moran, Banking Policy Division: Restructuring of the Irish Banking System (March 2011)

Ireland: Credit allocation

Source: J. Hurley: The Irish Banking Crisis Regulatory and Financial Stability Policy 2003-2008

• Stamp duty is a tax the government levies on the purchase of all residential property whether new or old.

• A capital gains tax is chargeable on the gains arising from the disposals of assets. Any form of property (other than Irish currency) including an interest in property (as, for example, a lease) is an asset for capital gains tax.

• Corporation tax in the Republic of Ireland is a levy on a company’s profits. The tax is charged on both a company's income and chargeable gains.

http://en.wikipedia.org/wiki/Tax

Source: Kitchen et al.: A Haunted Landscape: Housing and Ghost Estates in Post-Celtic Tiger Ireland (2010)

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