In the past, (Southern Europe followed) growth strategies led by domestic demand and then devaluing their currencies to offset the inflationary effects of such strategies on their external competitiveness. In EMU, they were unable to do that. Instead, not unreasonably, they took advantage of the cheap credit flowing from northern Europe to promote economic growth. But, unable to offset the inflationary effects through devaluation, they lost competitive advantage to the north. The result can be seen in the gross imbalance of payments between the two parts of the Eurozone.
Pity so few influential policy-makers seem to have figured this one out.
