From 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often in the first half of 2008, to non-financial sectors (the so-called ‘real economy’), as credit facilities were withdrawn and business and consumer confidence fell.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.
Nine of the 26 Member States for which data are available (no information for Malta) reported their highest index values for industrial output in April 2008 (the same month as the EU-27 average). The first industrial economies to move into recession (using this measure) were the Czech Republic, Portugal, Finland and Sweden, where output peaked at the start of 2008.
Figure 4 shows the length and depth of the downturn – the most extreme examples being Slovakia, where a five-month downturn in industrial activity resulted in the second largest contraction in output among the Member States; the duration of the downturn in Luxembourg and Italy was also shorter than the EU average, while overall losses in industrial production for both of these countries were well above the EU average.