Bart van Ark, Klaas de Vries and Kirsten Jäger.
The global economic and fi nancial crisis left the European economy in dire straits for almost a decade between 2008 and 2016. Despite the recent growth strengthening, which has brought average GDP growth rates for the euro area and the EU as a whole about back to their precrisis levels, it is too early to speak of a structural growth resurgence. Unemployment is still relatively high, and there are still sizeable output gaps as well as labour slack in several European economies. Moreover, one of the most important structural performance indicators, productivity, is barely on the path of recovery. At the macroeconomic level, labour productivity growth in the euro area was just one per cent in 2017 and a touch higher for the EU28 (1.2%), thanks to the better performing Central and Eastern European economies. Today’s growth rates are still only about half of the labour productivity growth rates in the two decades before the fi nancial crisis, and only a third of the growth rates in the 1970s and 1980s (see Figure 1). What is more, growth rates of total factor productivity (TFP) – a more refi ned productivity measure which measures output growth over combined labour and capital inputs – are still in the low tenths of a percentage point, and they show no decisive signs of recovery yet.