Eight years after global credit markets began to seize up, causing a round-the-world financial crisis, the economy of Europe’s 19-country euro currency union has only now edged back above its pre-collapse level.
As happened in the United States, the economy in Europe contracted sharply after the credit bubble burst. But unlike the United States, which surpassed its pre-bubble peak in 2011, and Britain which did so in 2013, the eurozone as a whole has stumbled along. And some eurozone countries have fared much worse than others.
Here are some of the bloc’s notable leaders and laggards:
A job fair in Madrid last year. With a 21 percent jobless rate in the first quarter of this year, Spain was the eurozone’s second-worst jobs generator. CreditSamuel Aranda for The New York Times
As happened in the United States, the economy in Europe contracted sharply after the credit bubble burst. But unlike the United States, which surpassed its pre-bubble peak in 2011, and Britain which did so in 2013, the eurozone as a whole has stumbled along. And some eurozone countries have fared much worse than others.
Here are some of the bloc’s notable leaders and laggards:
A job fair in Madrid last year. With a 21 percent jobless rate in the first quarter of this year, Spain was the eurozone’s second-worst jobs generator. CreditSamuel Aranda for The New York Times
Spain
In the eurozone, few countries have displayed the worst effects of the bloc’s eight-year economic struggle more vividly than Spain.
After the onset of the crisis in 2008, Spain’s government and central bank insisted that the country had enough fiscal resilience and banking buffers to weather the storm. By May 2010, however, the government was forced to adopt the first of many austerity budgets.
In mid-2012, with Spain mired deep in recession, Madrid had to ask its eurozone partners for a bailout to rescue Bankia, a giant savings bank that only a year earlier had conducted a seemingly successful initial public offering.
Last year, the pace of the country’s recovery prompted Prime Minister Mariano Rajoy to declare Spain an economic engine of the eurozone. Butinconclusive national elections last December left Mr. Rajoy in charge of only a caretaker government – one that recently revised its economic forecasts downward for this year.
When voters return to the polls in June, a big issue will be the country’s continued high unemployment. With a 21 percent jobless rate in the first quarter of this year, Spain was the eurozone’s second-worst jobs generator, after Greece.
And Spain sits anchored in last place in its ability to employ the young; almost half of Spaniards 16 to 24 years old have no jobs. – Raphael Minder
Germany prospered in recent years by exporting to emerging countries. Now the slowdown in emerging markets is leaving the country vulnerable. CreditGordon Welters for The New York Times
In the eurozone, few countries have displayed the worst effects of the bloc’s eight-year economic struggle more vividly than Spain.
After the onset of the crisis in 2008, Spain’s government and central bank insisted that the country had enough fiscal resilience and banking buffers to weather the storm. By May 2010, however, the government was forced to adopt the first of many austerity budgets.
In mid-2012, with Spain mired deep in recession, Madrid had to ask its eurozone partners for a bailout to rescue Bankia, a giant savings bank that only a year earlier had conducted a seemingly successful initial public offering.
Last year, the pace of the country’s recovery prompted Prime Minister Mariano Rajoy to declare Spain an economic engine of the eurozone. Butinconclusive national elections last December left Mr. Rajoy in charge of only a caretaker government – one that recently revised its economic forecasts downward for this year.
When voters return to the polls in June, a big issue will be the country’s continued high unemployment. With a 21 percent jobless rate in the first quarter of this year, Spain was the eurozone’s second-worst jobs generator, after Greece.
And Spain sits anchored in last place in its ability to employ the young; almost half of Spaniards 16 to 24 years old have no jobs. – Raphael Minder
Germany prospered in recent years by exporting to emerging countries. Now the slowdown in emerging markets is leaving the country vulnerable. CreditGordon Welters for The New York Times
Germany
The German economy suffered a sharp downturn in 2009 but snapped back quickly, thanks above all to China. Chinese hunger for German products like cars and machine tools more than compensated for lost sales in the slumping eurozone.
Germany also entered the crisis in a better position than countries like France or Italy because it had already taken politically treacherous steps — like removing obstacles to hiring and firing — in order to improve economic performance. Unemployment in Germany has fallen steadily and is now lower than that the United States.
But there is increasing doubt about whether Germany can continue its run.Growth has slowed in China as well as other markets, including the United States, that are important for German exporters. And German growth has been dampened by the woes of important trading partners like France and Italy. – Jack Ewing
The collapse of housing prices in Ireland, triggered by unchecked property speculation and low interest rates, wiped out many families’ savings. CreditAidan Crawley/Bloomberg News
The German economy suffered a sharp downturn in 2009 but snapped back quickly, thanks above all to China. Chinese hunger for German products like cars and machine tools more than compensated for lost sales in the slumping eurozone.
Germany also entered the crisis in a better position than countries like France or Italy because it had already taken politically treacherous steps — like removing obstacles to hiring and firing — in order to improve economic performance. Unemployment in Germany has fallen steadily and is now lower than that the United States.
But there is increasing doubt about whether Germany can continue its run.Growth has slowed in China as well as other markets, including the United States, that are important for German exporters. And German growth has been dampened by the woes of important trading partners like France and Italy. – Jack Ewing
The collapse of housing prices in Ireland, triggered by unchecked property speculation and low interest rates, wiped out many families’ savings. CreditAidan Crawley/Bloomberg News
Ireland
Ireland’s fast growth in the 1990s earned it the nickname “Celtic Tiger.” But the 2008 financial crisis revealed that much of that growth had been built on unchecked property speculation, fueled by low interest rates made possible by the European Central Bank.
The fall was swift and painful, as a collapse in housing prices wiped out many families’ savings. Worse, Irish taxpayers were saddled with a tab of 64 billion euros, or about $72 billion, to bail out the country’s banks. (The figure was eventually cut to about €40 billion after a debt refinancing.)
Deep government spending cuts added to the hardship. Unemployment climbed above 15 percent in February 2012, and some young people in this country of only 4.7 million followed the long Irish tradition of immigrating to more prosperous places.
But the bounce-back was more robust than that in most of the rest of the eurozone, as the Irish economy returned to its pre-2008 level by early 2014. Buoyed by strong trade links with Britain and the United States, both of which have outperformed the eurozone over the last eight years, Ireland is now one of the best-performing members of the euro currency bloc. – David Jolly
Photo
Probably no country has benefited more than Italy from stimulus measures the last few years by the European Central Bank. CreditGianni Cipriano for The New York Times
Ireland’s fast growth in the 1990s earned it the nickname “Celtic Tiger.” But the 2008 financial crisis revealed that much of that growth had been built on unchecked property speculation, fueled by low interest rates made possible by the European Central Bank.
The fall was swift and painful, as a collapse in housing prices wiped out many families’ savings. Worse, Irish taxpayers were saddled with a tab of 64 billion euros, or about $72 billion, to bail out the country’s banks. (The figure was eventually cut to about €40 billion after a debt refinancing.)
Deep government spending cuts added to the hardship. Unemployment climbed above 15 percent in February 2012, and some young people in this country of only 4.7 million followed the long Irish tradition of immigrating to more prosperous places.
But the bounce-back was more robust than that in most of the rest of the eurozone, as the Irish economy returned to its pre-2008 level by early 2014. Buoyed by strong trade links with Britain and the United States, both of which have outperformed the eurozone over the last eight years, Ireland is now one of the best-performing members of the euro currency bloc. – David Jolly
Photo
Probably no country has benefited more than Italy from stimulus measures the last few years by the European Central Bank. CreditGianni Cipriano for The New York Times
Italy
Because Italy has the third-largest economy in the eurozone after Germany and France, its problems are potentially a bigger threat to the bloc’s stability than those of relatively tiny Greece.
The Italian economy has not grown significantly in years, many of the country’s banks are barely solvent, and government debt as a percentage of gross domestic product is among the highest in the world.
Probably no country has benefited more than Italy from stimulus measures in the last few years by the European Central Bank, which have helped keep government borrowing costs low and have ensured that Italian businesses could still get some credit despite the poor health of the banks.
Matteo Renzi, Italy’s reform-minded prime minister, has been trying to make the country more accommodating to entrepreneurs. Later this year Italians will vote on changes proposed by his party to streamline decision making by the Italian Parliament and to end chronic political instability.
If Mr. Renzi succeeds, economists see hope that Italy — which is strong in sectors like fashion and machinery — could reduce bureaucracy and make other changes that would encourage growth. — Jack Ewing
Despite several rounds of debt relief, Greece’s economy still suffers from the crushing burden of past excess borrowing. CreditSergey Ponomarev for The New York Times
Because Italy has the third-largest economy in the eurozone after Germany and France, its problems are potentially a bigger threat to the bloc’s stability than those of relatively tiny Greece.
The Italian economy has not grown significantly in years, many of the country’s banks are barely solvent, and government debt as a percentage of gross domestic product is among the highest in the world.
Probably no country has benefited more than Italy from stimulus measures in the last few years by the European Central Bank, which have helped keep government borrowing costs low and have ensured that Italian businesses could still get some credit despite the poor health of the banks.
Matteo Renzi, Italy’s reform-minded prime minister, has been trying to make the country more accommodating to entrepreneurs. Later this year Italians will vote on changes proposed by his party to streamline decision making by the Italian Parliament and to end chronic political instability.
If Mr. Renzi succeeds, economists see hope that Italy — which is strong in sectors like fashion and machinery — could reduce bureaucracy and make other changes that would encourage growth. — Jack Ewing
Despite several rounds of debt relief, Greece’s economy still suffers from the crushing burden of past excess borrowing. CreditSergey Ponomarev for The New York Times
Greece
Even as the world was regrouping from the 2008 meltdown, Greece provoked the eurozone’s own crisis in 2010, when it revealed that it was far deeper in debt than official figures showed. The country has suffered the most from the consequences.
Greek economic output has fallen by more than one-fourth since 2010, more than a quarter of the work force is unemployed and about half of all bank loans are in default. To prevent a run on struggling Greek banks last year, the government imposed restrictions, still in effect, on how much cash citizens could withdraw from their accounts or transfer abroad.
Despite several rounds of debt relief, the economy still suffers from the crushing burden of past excess borrowing.
Recently, there have been signs that the Greek economy has hit bottom. But political instability has made it difficult for the left-wing government of Alexis Tsipras to overcome resistance from vested interests and implement changes needed to improve the climate for business.
Greek leaders are in nearly continuous conflict with other eurozone countries over the terms of aid needed to prevent the economy from collapsing. As a result, there is a persistent danger that Greece could be forced out of the eurozone, threatening the stability of the whole bloc. —Jack Ewing
The so-called Nuit Debout, or “Up All Night” movement, has centered on the Place de la République in Paris. CreditPhilippe Lopez/Agence France-Presse — Getty Images
Even as the world was regrouping from the 2008 meltdown, Greece provoked the eurozone’s own crisis in 2010, when it revealed that it was far deeper in debt than official figures showed. The country has suffered the most from the consequences.
Greek economic output has fallen by more than one-fourth since 2010, more than a quarter of the work force is unemployed and about half of all bank loans are in default. To prevent a run on struggling Greek banks last year, the government imposed restrictions, still in effect, on how much cash citizens could withdraw from their accounts or transfer abroad.
Despite several rounds of debt relief, the economy still suffers from the crushing burden of past excess borrowing.
Recently, there have been signs that the Greek economy has hit bottom. But political instability has made it difficult for the left-wing government of Alexis Tsipras to overcome resistance from vested interests and implement changes needed to improve the climate for business.
Greek leaders are in nearly continuous conflict with other eurozone countries over the terms of aid needed to prevent the economy from collapsing. As a result, there is a persistent danger that Greece could be forced out of the eurozone, threatening the stability of the whole bloc. —Jack Ewing
The so-called Nuit Debout, or “Up All Night” movement, has centered on the Place de la République in Paris. CreditPhilippe Lopez/Agence France-Presse — Getty Images
France
With a sizable presence in auto making, and aeronautics and power-plant manufacture, not to mention a few of the Continent’s big banks and luxury brands, France has the eurozone’s second-biggest economy, behind Germany’s.
But the French economy has consistently under-performed Germany’s since 2008, which some blame on a tradition of high taxes and labor protections that many businesses find constraining. The Socialist government’s inability to bring unemployment below 10 percent has contributed to President François Hollande’s dismal poll ratings and helped to propel the rise of the far right National Front party.
The government’s recent efforts to make labor laws more business-friendly have led to protests around the country — the so-called Nuit Debout, or “Up All Night” movement, centered on the Place de la République in Paris.
“Things haven’t gotten any better since the crisis,” said William Petit, 57, a retired advertising salesman who has been among the demonstrators. “Today’s young people have no chance.”
Asked if he would consider voting for Marine Le Pen, leader of the far right National Front, Mr. Petit replied, “Why not? We might as well try.” — David Jolly
With a sizable presence in auto making, and aeronautics and power-plant manufacture, not to mention a few of the Continent’s big banks and luxury brands, France has the eurozone’s second-biggest economy, behind Germany’s.
But the French economy has consistently under-performed Germany’s since 2008, which some blame on a tradition of high taxes and labor protections that many businesses find constraining. The Socialist government’s inability to bring unemployment below 10 percent has contributed to President François Hollande’s dismal poll ratings and helped to propel the rise of the far right National Front party.
The government’s recent efforts to make labor laws more business-friendly have led to protests around the country — the so-called Nuit Debout, or “Up All Night” movement, centered on the Place de la République in Paris.
“Things haven’t gotten any better since the crisis,” said William Petit, 57, a retired advertising salesman who has been among the demonstrators. “Today’s young people have no chance.”
Asked if he would consider voting for Marine Le Pen, leader of the far right National Front, Mr. Petit replied, “Why not? We might as well try.” — David Jolly
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