The European Central Bank said Germany has gained competitiveness since the launch of the euro, but Spain and Ireland have become significantly less competitive. The ECB has calculated a set of harmonised competitiveness indicators for euro zone countries, taking account of national inflation rates and economies' sensitivity to exchange rate moves. The competitiveness indicator for Germany improved by 2.7 pct between the first quarter of 1999 and the final quarter of last year, the ECB said in its February monthly bulletin. Finland's indicator also improved 2.7 pct, while the Austrian indicator improved 2.0 pct. But indicators for all other euro zone countries deteriorated. The indicator for Ireland worsened 17.0 pct and that for Spain 11.2 pct. The ECB said persistent inflation differentials appear to have played a major part in changes in competitiveness. Germany, Finland and Austria recorded the lowest HICP inflation rates over the period, while Spain and Ireland were among those with the highest rates. The ECB said a careful examination of competitiveness indicators is important in a monetary union because national policymakers can no longer use the exchange rate to compensate for losses in competitiveness. "In the end, protracted losses in price competitiveness could signal impediments associated with structural rigidities in the wage and price-setting mechanisms and/or a lack of competition, which in turn would call for resolute action in these areas," it said.