This matters not just for welfare and social cohesion within individual countries. It also matters for the functioning of Monetary Union. If countries have very different economic structures, their business cycles will diverge when faced with common shocks: some will return quickly to trend growth and full employment, while others will require a longer period of recession for prices and quantities to fully adjust.
By contrast, better, mutually compatible economic structures among countries support growth on a sustainable basis and produce less dispersion when recessions hit. Reforms which improve economic structures make countries more resilient and the single monetary policy more effective. The current economic expansion offers a unique window of opportunity to make further progress in Europe’s reform agenda.