While the latter makes for a better and fairer society, it has to be financed by relatively high taxes, a combination of factors which means that our savings rate is low by Asian standards. This means that we will continue to rely on foreign savings to augment our own, and hence we need to remain an attractive place for foreigners to invest.
This should, however, be no reason for any complacency in the euro area. As the crisis has taught us, persistent losses in competitiveness on the part of individual members in a currency union lead to a build-up of external and internal imbalances. When these unravel, the cost for the affected economies can be very large.