Dutch Economy Shows Most Improvement in Competitiveness in EU
The Netherlands showed the most improvement in competitiveness last year among the European Union’s 14 largest economies, a study showed.
Even as the Dutch economy entered its first recession in almost three decades, the Netherlands jumped six places to third in a ranking of progress on a set of EU economic goals known as the Lisbon targets, according to a report published today by Brussels-based research group Lisbon Council and insurer Allianz SE. The Netherlands, the sixth-largest economy in the EU, is home to Royal Philips Electronics NV, the world’s biggest light-bulb maker, and ArcelorMittal, the largest steel producer.
Finland remained at the top of the list and Poland held onto the No. 2 spot. The Lisbon Council measures competitiveness using indicators such as economic and productivity growth, employment, investment and public finances. The Lisbon goals were adopted by EU policy makers in 2000 with the aim of turning the bloc into the “most competitive knowledge-based economy” by 2010, a deadline that was abandoned halfway through the decade.
The worst global economic slump since World War II is devastating economies across the continent, forcing companies to cut output and jobs and boosting government spending. The European Central Bank on March 5 lowered its key interest rate by half a percentage point to a record low 1.5 percent and indicated more cuts are likely to combat the worsening recession.
“Declines in growth rates and labor productivity will be followed by deterioration in employment and public finances,” according to today’s report. The competitiveness table reflects “a severe downward trend, which will continue.”
Biggest Contraction
Ireland, which is facing the biggest contraction among the 16 euro-area nations after a decade-long boom, dropped the most in the competitiveness rankings, today’s report showed. “Its reliance on external trade and the importance of its financial- services sector in national output made it particularly susceptible to the global economic downswing and international financial turmoil,” according to the report payday loan lenders.
“The economic recession will be very damaging to the labor market in the course of 2009,” the authors said in the report. The employment markets in Italy and Poland were the least competitive, while Denmark led the job-market rankings.
As companies throughout Europe cut production and lay off workers to deal with the recession, unemployment increased in January in all but four EU countries, the European Commission, the bloc’s executive arm, said in a labor-market report on March 6. Europe’s jobless rate rose to the highest in more than two years in January.
Budget Deficits
With governments committing billions of euros to lessen the impact of the economic slump, budget deficits have ballooned across the region. The EU, which forecasts that the 27-nation bloc’s overall budget shortfall will more than double this year to 4.4 percent of output, warned national leaders on Feb. 18 to bring their surging deficits back in line as soon as possible.
“The economic crisis has wreaked havoc with public finances,” the authors said in today’s report. “The full brunt of this will not be felt in the public deficits until this year and next.”
While Spain also moved up six places in the overall competitiveness rankings, reaching No. 6, its “success is somewhat ambiguous,” according to the report. Spain’s biggest improvement was in labor productivity, which came “mostly on the back of rapidly rising unemployment,” the authors said.