In other words, it would seem that public spending could be substantially reduced without a detrimental impact on the volume of output. Additionally, a more efficient public administration would also allow the indirect costs of public sector inefficiency, linked to financing through inappropriate taxation regimes, to be reduced. Let me finally mention the important issue of competitiveness.
One of the most important market-based adjustment mechanisms in a monetary union works via changes in competitiveness. In the euro area, persistent losses in relative cost competitiveness necessarily translate, in the medium term, into a period of below-average growth and an abnormal level of unemployment.