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Financial crisis: 10 years later

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The financial crisis began with the collapse of Lehman Brothers, starting a worldwide chain reaction. The EU economy contracted for five consecutive quarters, with growth returning only in the second half of 2009. Stimulatory and fiscal actions by national governments and the EU, and the Eurosystem’s loose monetary policy, helped achieve recovery. It was short-lived, however, as in 2010 a sovereign debt crisis resulted from a loss of financial market confidence, with soaring public debt. Yields on government bonds, particularly in the periphery countries, rose dramatically. Ad hoc rescue devices, such as the European Financial Stabilization Mechanism, brought the situation under control, later supported by the pledge of European Central Bank President Mario Draghi to do ‘whatever it takes’ to save the euro. The acute phase of the crisis ended in 2014, followed by a period of extremely low inflation and weak growth. To boost inflation, facilitate bank lending and stimulate the economy, the Eurosystem relied increasingly on quantitative easing. While 2017 was the EU’s best year since the crises, with economic performance returning to pre- financial crisis levels, recent data suggest that the momentum is weakening, both in and outside the EU.

The crisis caused unemployment to increase between 2008 and 2018 in the regions marked in brown and orange on the map– mainly in Spain, Italy, Greece, Cyprus, Slovenia, France, Denmark, Lithuania and in parts of Austria, Croatia, the Netherlands, Finland and Sweden. Conversely, it decreased in the regions marked in teal and light blue (in Germany, Hungary, Slovakia, Cyprus, Poland and parts of the UK, Romania and Czechia ). At the same time, the employment share of the active population decreased in Denmark and Ireland only, while increasing by more than 5 pp in Poland, Czechia, Lithuania, Hungary and Malta.

At EU level, unemployment rose most between 2008 and 2013, when it reached the record level of 26.5 million (11 %). Afterwards, it began to fall, reaching 6.2 % in August 2019, the lowest level this century. However, the situation varies significantly between Member States, with the highest levels (between 10 and 20 %) persisting in those countries hardest hit by the crises, such as Greece, Italy, Portugal and Spain, while the lowest figure was recorded in Czechia (2.2 %). It is also worth noting that despite undoubted improvements in employment and labor market conditions in Europe, one of the lasting legacies of the crises is high unemployment among young people, particularly in the southern Member States.

For more information on this issue, you may read the research brought by the European Parliament:

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