Recent Trends in Europe's Output and Productivity Growth Performance at the Sector Level, 2002-2015

Using the latest release of sector-level growth and productivity data up to 2015 from the EU KLEMS database, evidence is mounting that the global financial crisis (2008/09) and the Euro Area recession (2011/12) have significantly damaged the growth potential of European economies across the board. None of the countries in the 12 EU member states included in the analysis have recovered to growth rates anywhere near to what they were in the decade before the crisis. Slow productivity growth which was already visible in most market services sectors before the crisis has broadened to the goods-producing sector for most European economies since the crisis. The manufacturing sector was particularly hard hit, and has only partially recovered. The dynamics of the global and Euro Area crises and their impact seem still to be in full swing, making it too early to judge whether output and productivity growth rates can still recover to the pre-crises rate or whether growth in Europe will end up as a slower long-term trend.