Recovery hits a low ceiling

Recovery in output growth in the EU and the eurozone peaked in 2017 at 2.4%, confirming that the European economy is still facing the challenge of declining output growth rates that have been observed since the mid-1990s (see Figure 1.1). Despite differences in the speed and rate of recovery to the US and (initially) Japan, the downward trend in output growth rates is also visible in these advanced economies. The duration and form of the Great Recession seem to have further reinforced this downward trend, as the prolonged weakness in demand has eventually had negative effects on the capacity of the European economy to produce and grow.

The most recent forecasts of the European Commission suggest that real GDP is expected to grow at 1.9 and 1.8% in 2019 and 2020 respectively. These forecasts, which are downward revisions compared to the last spring and autumn forecasts, may be further revised downwards due to, among other things, developments in the global environment, from the economic consequences of the impending Brexit to the possible escalation of trade protectionism and its impact on major European industries, to the spread of turmoil in financial markets.

more information in Benchmarking Working Europe 2019 chapter 1 'Macroeconomic developments in Europe: tackling the growth, inequality and climate change challenges'