In recent decades, the CEECs have developed on average three times faster than the rich economies in the West. However, the differences in terms of development within the EU-15 are higher than before European integration and still deepening, mostly owing to deterioration in the Southern countries’ situation. Compared to 1995, there has been a 20 per cent increase in differences in GDP per capita level in the EU-15. Moreover, the structural differences between EU Member States are almost as large today as they were in 1995, as follows from the report ‘An EU of convergence or divisions? The European economy 30 years after the Treaty of Maastricht’ by the Polish Economic Institute.

‘Generally speaking, we observe a dynamic economic convergence within the EU. However, the blurring of differences in the level of development between countries mainly results from rapid growth in Central and Eastern Europe (CEE). In 1995–2020, the CEE countries grew at a rate of 3.1 per cent per year, more than three times faster than the EU Centre. The most impressive growth occurred in the Baltic States. In 1995, GDP per capita in Lithuania was 27 per cent of that in Germany. By 2020, the figure had increased to 72 per cent. In Poland and Romania, GDP per capita increased from 33 per cent and 31 per cent of Germany’s 1995 level to 63 per cent and 56 per cent, respectively, a quarter of a century later. As a result, the standard of living in the CEE countries is rapidly approaching that in Western Europe. At the same time, the EU-15 economies are not converging. A turning point in the ‘old’ Member States’ recent history was the financial crisis of 2008, when the countries of Southern Europe fell into a prolonged recession and the differences between them and Western Europe increased significantly. This is the opposite of the desired outcome – for less wealthy countries to catch up with their richer neighbours, they need to grow more rapidly’, says Jakub Sawulski, head of the macroeconomics team at the Polish Economic Institute.

A two-speed Europe is not a figure of speech

Although economic convergence has been advancing within the EU over the past 25 years as the gap in GDP per capita between EU countries has decreased by an average of 18 per cent, the process slowed down after the financial crisis. In 1995–2010, differences in development within the EU declined 2.5 times faster than today. The Southern countries suffered the biggest hit. The economic stagnation which emerged in the South of the continent has created a two-speed Europe.

Between 2010 and 2020, GDP per capita in Spain and Italy decreased by a combined total of 2.9 per cent and 8.6 per cent respectively. The average Greek was almost 20 per cent poorer in 2020 than a decade earlier. Only Portugal recorded minimal economic growth of 0.1 per cent per year. At the same time, the economies of Germany and Denmark grew by more than 9 per cent. As a result, the disparity in the level of prosperity between the EU’s South and Centre has been growing dramatically. In 1995, Italy was as wealthy as Germany. Today, it is almost 25 per cent poorer.