The eurozone debt crisis widened the economic gap between northern and Southern Europe. The worst affected countries, Portugal, Italy, Greece and Spain, were pejoratively dubbed “PIGS” by northern countries which now see the southern economies leading European growth while their own are sinking.

The 2008 financial crisis had a devastating impact worldwide, especially in southern European countries. The bursting of the housing bubble in Spain, the debt burden in Italy, financial mismanagement in Greece and structural economic problems in Portugal led to drastic austerity measures following the intervention of the Troika, the triumvirate formed by the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF).

These countries were known as the “PIGS”, a pejorative term used by northern European countries when criticising southern countries’ debt and deficit management. Ireland was later added to the group of undesirables, even though Greece was the most prominent case because it had one of the highest debt levels.

The EU’s response was to approve plans for an economic ‘bailout’ that came with draconian austerity measures that bailed out mainly German and British banks at the expense of condemning generations of the populations of the supposedly rescued countries to pay this debt. These measures were extremely unpopular and provoked many social protests, well-known to the IMF executives.

Leading economic growth

A decade and a half after this financial defeat, the European economic scenario turned 180 degrees. Although the ‘PIGS’ continue to work their way out of the EU’s economic periphery, they have become its new engine of growth, while the northern countries are a drag.

During the last 12 months, the eurozone has dodged a technical recession by a miracle, however, Spain and the rest of the PIGS have managed to lead economic growth and be mainly responsible for preventing this technical recession from occurring.

It is true that the structural reforms implemented in industry, the labour market and the financial sector, together with advances in monetary and fiscal unity, contributed to improving the competitiveness of the southern countries, but other factors have influenced the economic recovery and leadership of recent years.

The better performance of southern European economies relative to the rest of the EU can be explained by developments in the energy sector and tourism, in particular the way these sectors have been affected by the war in Ukraine and the health pandemic. The greater weight of the tourism sector in the southern countries has been felt, as well as their lower dependence on Russian gas compared to other countries such as Germany, which has been hit by a severe self-imposed industrial crisis with the sanctions on Russia.

Aside from this recent economic revival in southern European countries, it remains to be seen whether they will be able to create a more sustainable economic model that is less dependent on tourism, control public debt and improve their productivity. In any case, it seems that being a ‘pig’ is not such a bad thing these days.

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