The Lost Decade: How EU countries can recoverIn 2008, the United States, Europe and other parts of the world experienced a sometimes catastrophic hit to their respective economies.
How Europe has recovered from the Lost DecadeUnlike the US, which seems to have mostly put its worst recession days behind it, Europe hasn’t yet quite recovered so robustly. This period of struggle is known as “the Lost Decade,” and it’s comprised of a sum of parts that may prove difficult to overcome.
What Is the Lost Decade?Called such because of the overall loss of business success and innovation, R. Sean Randolph at The Wilson Quarterly explains the Lost Decade: “Since the 2008-9 recession, Eurozone countries have been treading water, bobbing up and down in the wake of the economic storm: falling into recession in spring 2008, rising out in spring 2009; falling again in late 2011, rising again to grow by 1 to 1.5 percent in 2014 and 2015. Across the Eurozone, success is piecemeal and has varied by region and country.” Indeed, Randolph mentions how some countries, such as Poland, have completely dodged the effects of this Lost Decade. Others, like Italy, have been slammed hard. Germany has only recently figured out a way to restabilise, with an increase in its gross domestic product reported for 2015. However, many experts across the board, some of them Europeans themselves, believe that while there have been small glimpses of hope for some European countries, overall it could take the next several years for these countries to dig themselves out of this hole. Political matters such as Brexit only further complicated an already tough situation. Until then, economic stasis, a continued dwindling in the value of the Euro and a general sense of sinking deeper are likely to prevail.
What Caused the Lost Decade?It wasn’t one particular event that contributed towards this period, but rather a combination of factors that have made themselves pronounced over the years.
Economic CrashDan Steinbock at The European Financial Review notes the European economic crash started with the banks. He says Brussels felt these effects first (enough so that the country “launched its EUR 770 billion ‘stock and awe’ rescue package to stabilise the Euro area”), but other countries in Europe were soon experiencing the same thing. Jobs were affected, many of them disappearing as banks made changes that citizens couldn’t keep up with (they “hiked rates instead of cutting them,” says Steinbock). “Markets stabilised, but not without huge bailout packages which divided the Euro area between fiscally conservative North and economically ailing South, while Central and Eastern Europe were swept by economic and geopolitical changes,” he writes. While Europe did indeed financially and economically recover, those times were fleeting at best and always led to somehow sinking back into trouble. Steinbock notes many countries’ real GDP was sluggish or just stayed put. This all set the stage for further problems that would plague European countries over this Lost Decade.
Lack of Big PlayersTo make his point about the lack of big players in business in Europe, Randolph defines both transformative and incremental innovation. The definitions are as follows:
- Transformative innovation — This type of innovation “can be game-changing, causing disruption of existing industries and processes, creating new industry leaders, and sometimes fundamentally changing the way people live.”
- Incremental innovation — This “is important to creating value, but by its nature is often about building on existing creations; its returns are less explosive, but often are more stable.”