It has been only a few years since Portugal, Italy, Spain and, above all, Greece were the “naughty children” of the EU and the Eurozone. Since then, a lot has changed, according to Spanish Prime Minister Pedro Sanchez: “We in the south can also help solve common problems,” the politician told the World Economic Forum in Davos.

Sanchez referred to the energy crisis after the Russian invasion of Ukraine and Spain’s capabilities to produce and export a greater amount of clean energy. In this way Spain could become “the best economy on the planet”.

Germany follows opposite course

However, in terms of the overall situation in Europe, things do not look so rosy: the eurozone economy is stagnant. As Eurostat announced, in the last quarter of 2024, total GDP remained the same as the autumn quarter, while a slight increase of 0.4%was recorded during the summer quarter.

Many experts agree: This is mainly due to the chronic weaknesses of the greatest economy of Epirus. During the fourth quarter and in total in 2024 GDP in Germany shrunk by 0.2%.

Does the European locomotive run out of fuel?

So the biggest economy of the eurozone finds them dark and the former naughty children are “coming forward”. Could the countries of the European South lead?

According to the economist and director of the Austrian Institute of Economic Research (WIFO) Gabriel Felbermire, probably not – because “they are” economically very small “. Germany and France represent “more than 50% of eurozone GDP. And in this northern bloc with strong industry, countries such as Austria, Slovenia, Slovakia and the Netherlands must also be included. ” And these countries, as well as countries that are out of the euro but within the EU, such as the Czech Republic, “suffer from the weaknesses of the EU industrial core”.

The role of high energy costs

But why are southern countries strengthened so much and grow faster than other great powers? According to Hans-Werner Zin, former head of the IFO Institute, this is the result of both external reasons and certain decisive political developments: “In recent years Germany has suffered much of the energy crisis caused by war in Ukraine and lack of energy stock. “

The expert oppose the removal of fossil fuels and the shift to green energy. “EU and Germany have lost the measure” and the result is Germany “having the most expensive electricity across the globe”. Because of this, “the chemical industry”, but also the automotive industry, which is crucial to the country, suffer “in particular, with Zin accusing the EU of led the German automaker to” lose its competitiveness “.

The advantages of southern states

Felbermire’s view is similar. Tourism and agriculture play a bigger role in the southern countries and the smaller industry. Therefore, “the highest energy prices, trade wars, challenges due to carbon detoxification – all of which affect the countries of the South and more of the North.”

In addition, the southern states have the following advantage: since 2010 inflation in these countries is lower, “which favors their competitiveness. The reforms at the euro crisis therefore brought about fruit in Greece, Spain and Portugal. “

The difficulties facing the eurozone, of course, now adds that Donald Trump and his threats to impose high duties – and if the US really makes such a measure, Germany, which is very much based on exports, would accept one more. big blow.

‘There are no signs of recovery’

“There is no evidence of recovery so far,” observes the director of the Macroeconomics and Research of Economic Activity (IMK), Sebastian Dulien, in Reuters. Seeking to explain the causes of the recession of German economic activity, the expert refers, inter alia, “China’s aggressive industrial policy, which is more exported. Still, the ECB’s interest rates, which remain high, slow down investment. “

As German Finance Minister Robert Hambek pointed out at the World Economic Forum, it seems “we have overlooked that this is not a short -term, but a structural crisis”. We need to “redefine our business model,” the Greens politician stressed.

What do you need now?

For 2025, the European Commission expects a slight recovery of economic activity in the eurozone and a growth of around 1.3%. At the same time, it is estimated that the ECB will make successive interest rates.

Felbermire does not consider that the current balance of forces between the states of the North and the South is unusual. “One is leading the industrial north, the other the South, which is strong in the service sectors. And that’s how the situation is in other major economies, such as in the US. “

The decisive is “the north to promote the necessary reforms to improve competitiveness, but the south is left behind. It is also important to reinforce the internal market, which is an important vehicle for balancing the power of the different regions, ”the expert on DW points out.

Curated by: George Passas