Almost all countries in need of adjustment... are slashing their underlying fiscal deficits and improving their external competitiveness at an impressive speed, the report said. Greece, Ireland, Portugal and Spain have all applied for euro zone loans to help them cope with the effects of the sovereign debt crisis. All of the four eurozone countries that have been granted external assistance Greece, Ireland, Portugal and Spain have strengthened their adjustment efforts over the last 12 months, the report said.
In other words, under the pressure of crisis, the countries that need to shape up fast are doing so. The results reveal no trace of a moral hazard, that is of a hypothetical risk that outside support could blunt the readiness to adjust, it said.
The report, called the 2012 Euro Plus Monitor, showed that external imbalances, which were one of the reasons for the debt crisis, were diminishing and that wage pressures were converging rapidly within the euro zone. Real unit labour costs were falling sharply in Greece, Ireland, Portugal and Spain. On the other hand, wage moderation has ended.
More than anything else, this shows that serious structural adjustments can happen and are happening within the confines of the monetary union, the report said. It said that while the euro and its governance structure still needed to be improved, they were already providing an important framework in which countries can successfully reform themselves.