Europe’s Competitiveness Obsession

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In this commentary, CEPS Director Daniel Gros argues that the current emphasis on wage divergences in the eurozone and the proposition that governments “must do something about competitiveness” risks leading to an excessively activist approach to economic policy coordination, with governments and EU institutions constantly trying to influence wage-setting in the private sector. This might work – at least partly – in the current crisis, but it will not prevent problems in the future unless divergences in domestic demand are also addressed.