And where a large proportion of wage contracts is indexed to prices, as in Spain, higher inflation would rapidly work its way through to wages.The wrong cureAn exit from the euro would not tackle weak productivity growth and inflexible wages, which are the root causes of low competitiveness.
Wages are rising, corporate debts are mounting and the struggle to maintain a loose peg with the dollar has caused a loss of competitiveness against Asian rivals.
In any case, the causes of Brazil's competitiveness problem go far deeper than the exchange rate.
In a desperate effort to do something – anything – to defend their economies, they turned to protectionism, imposing "exchange-rate dumping" duties, and import quotas to offset the loss of competitiveness caused by their own increasingly overvalued currencies.
In its recent four-year corporate plan, the company straight-up acknowledged that "VIA Rail's lack of competitiveness is caused by its very low frequencies, ever increasing trip times and deteriorating [on time performance]." Can't get much more blunt than that.
The well-publicized problems confronting some European countries — caused, in part, by their lack of competitiveness — have infuriated Germans who fear they will have to pay for bailouts.
Sweden also has to cope with problems of competitiveness that have caused industry to invest much more abroad than at home.
The growth card is complicated precisely because losses of competitiveness may have caused union decline.
Instead, the evidence should produce some soul-searching about the causes of this country's declining competitiveness.
But its famous lack of competitiveness is a recent development, caused by massive post-euro inflows of capital that raised costs and prices.
A shortfall of big firms is linked to the sluggish productivity and loss of competitiveness that is the deeper cause of the euro-zone crisis.
