Eurozone: Trouble in the core?

Many people lazily assume that the eurozone is now split into a strong, prosperous core and a weak, depressed periphery. Southern Europe and Ireland – the periphery – face exceptional economic weakness as they tighten fiscal policy and undergo a painful period of internal devaluation in a drive to reduce their costs relative to the core. By contrast, Germany, Austria, the Netherlands and Finland – the core – are assumed to be structurally robust economies, with sound public finances, competitive export industries, and good economic prospects. The reality is different and more worrying.