To reduce the persistence of low capacity utilisation and higher unemployment in the regions hit by a negative shock, it is important to foster competition and trade across national borders. Firms and workers in the slow-growing regions with under-utilised capacity would then find it easier to supply their goods and services in fast-growing, overheating regions.
Enhancing crossborder trade and competition would thus contribute over time to a smoother and quicker “reallocation of excess demand” across the euro area countries and in this way allow the euro area to adjust to  6  BIS Review 36/2006  asymmetric shocks and different national policies with less pronounced and less persistent swings in relative wages and in relative unemployment.