Preparing for Europe’s next recession as future looks bleak

Jean Pisani-Ferry looks at the options open to the EU as it considers what it can do to help the continent emerge from the economic doldrums

If you do not understand what is happening to the eurozone economy, you are not alone. One day we are told that growth is definitely passé; the next that recovery is on track; and the third that the European Central Bank is considering sending cheques to all citizens to boost output and revive inflation. Rarely has the economic picture been so confusing.

Start with medium-term growth. Since the global financial crisis erupted in 2008, productivity has grown at a snail’s pace. Oddly, the smartphone’s magic computing power does not seem to offset the slowdown in efficiency gains in manufacturing and standard services. For almost a decade, annual productivity growth in the advanced economies has been close to 1%, versus 2% previously.