Ireland, Finland, and France may actually be losing growth because of their euro membership, according to a new report from Societe Generale.
The research shows that, from 1999 to 2009 (the euro adoption era) Ireland’s export market share within eurozone member states has fallen 1.1 %, France’s 4.5%, and Finland’s 0.6%.
That may not mean much, but when you look at how it impacts GDP, it’s huge.
Ireland has lost 9.1 points of GDP growth, Finland 4.5 points, and France 3.1 points over the time period due to this slip in exports.
But maybe it’s not all about the currency.
From Societe Generale (emphasis ours):
Overall, the differences in price and cost competitiveness are fairly tightly correlated with the trends in market share over the last 10 years. However, they do not explain everything. For example, despite low price competitiveness Spain has gained export market share. Conversely, France and Finland have lost market share even though their price competitiveness is unchanged.
So while it may not make sense for France and Finland to leave the euro, it may make sense for Ireland.
Its dramatic drop in exports has largely been the product of its lack of price competitiveness (higher wages, higher input costs) brought on by euro membership.
As the Irish bailout comes under political scrutiny with a new parliament, look for this fact to be utilized by those fighting for escape from the eurozone.
From Societe Generale:
Photo: Societe Generale
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