Post-crisis development of GDP, 2011


Observations for policy

The different speeds at which European regions grow need to be addressed in order to prevent further increases in regional disparities. National-level policies and macroeconomic conditions have a big impact on regional performance, suggesting a need to coordinate national policy cycles at EU-level. As a result, most of the Polish and German regions have very high growth, while poor national policy effects are evident in Greece, Spain and the UK where regions are declining or barely growing. In an effort to better coordinate national-level policies, the EU introduced the European Semester after the financial crisis.

Policy context

Since 2014, the EU put in place a policy coordination mechanism called the “European Semester“ in order to align national policies to match Europe 2020 objectives, as well as to more effectively counter adverse shocks across countries on the continent. The periodical country-specific recommendations resulting from this exercise are addressed by national governments through policies. Country-specific recommendations were taken into account, for instance, when designing regional development operational programmes as part of the EU Cohesion Policy 2014 – 2020.

Growth in Europe is envisaged to be smart, sustainable and inclusive, according to the Europe 2020 strategy. Its various flagship initiatives such as “Innovation Union“, “Resource-efficient Europe“ and “An Agenda for new skills and jobs“ aim at making the EU a knowledge economy, which can withstand external shocks (such as financial crises) and grow sustainably.

Map interpretation

The map shows that, by 2011, most European regions reached and surpassed the GDP (in PPS) level they had before the crisis. Regional patterns are, however, observed: clustered regions which did not recover their pre-crisis GDP levels can be observed in Southern Europe, the Netherlands, the UK and North-eastern Europe (Finland and two Baltic states). For the very large majority of the other regions, GDP levels have grown since the crisis and there are many cases (especially in Germany and Poland) where regions recorded impressive growth rates.

A difference is observed in the speed of growth between the two sides of Europe along the German-French border: the Eastern part appears to be growing very rapidly and the majority of its regions recovered their 2008 GDP in PPS levels. The Western part describes a slow-growing area with many regions not yet recovered. For Eastern European countries this can be explained with the so-called “catch-up effect“ or economic convergence, whereby poorer regions tend to grow faster than richer ones and eventually converge. For Germany, however, the booming regions are those located in the industrial core of Europe, which are mostly export-oriented regions and are thus not crucially affected by neighbouring difficulties.

Concepts and methods

GDP growth at PPS indicates by how many percentage points the average purchasing power changed in each region, expressed in currency units that are equivalent in value across all countries. Blue circles indicate that a region did not return to its pre-crisis (i.e. 2008) GDP level in PPS by 2011, while red circles indicate that GDP in PPS recovered in 2011 relative to its 2008 value.

Gross Domestic Product (GDP) reflects the commercial value of all final goods and services produced within a given area at a given time. Purchasing Power Standard (PPS) is an artificial currency unit, which can buy the same amount of goods and services in each country. It is calculated by dividing a country’s GDP in national currency by its Purchasing Power Parity, an estimation of the adjustment needed on the exchange rate between two countries’ currencies so that the exchange is equivalent to each currency’s purchasing power.