Recession in the EU-27: Length and depth of the downturn varies across activities and countries

In simplified terms, the financial crisis during the summer of 2007 resulted from a fall in asset prices after a period of asset price inflation, leading to a liquidity shortage among financial institutions and concerns over their solvency. These concerns were subsequently transmitted, often in the first half of 2008, to non-financial sectors (the so-called ‘real economy’), as credit facilities were withdrawn and business and consumer confidence fell. The length and depth of the recession was considerable and in some cases the contraction in activity was the largest seen since the 1930s; however, there are now signs of a recovery. This publication therefore takes stock of the situation by measuring the extent of the recession from the most recent peaks in activity to the bottom of the cycle when output reached its lowest point (troughs). The publication also sets the recession in context by comparing it with earlier periods when business activity also experienced a contraction.