OH, REALLY?

Spain is set to usurp Germany as the strongman of Europe, due to the increasing competitiveness of its exports, say Morgan Stanley analysts, who think fiscal rebalancing will continue in the country despite its current political turmoil.

No, not really:

But Moorad Choudhry, a professor at Brunel University, disputed Fels's view that high unemployment benefited Spain's economy.

"There is more to productivity and competitive position than unit labor costs. If there wasn't, we could observe Bangladesh's average wage cost of one dollar a day and conclude that it will overtake Germany in the export league table," he said.

He added that Spain's economy has "eight or nine" major weaknesses that must be addressed, on top of export competitiveness.

"The Spanish economy suffers from bottlenecks on the supply side, labor market rigidity, stifling bureaucracy, heavy weight real-estate loan losses still to be recognized on bank balance sheets and an excessive social welfare bill, which is why I would not rush to suggest that Spain is the new Germany."