How much slack is there in the euro-zone?

The damaging effects of the recession and financial crisis have almost certainly hit the euro-zone’s productive potential, suggesting that conventional estimates of spare capacity exaggerate the amount of slack in the economy. But, even accounting for this, spare capacity is set to rise to a record level, presenting a strong risk of a sustained period of deflation to come.

Subscriber content

Read this in full, free

Start a free trial and use one of your 10 free starter credits to unlock this piece.


Free. 10 articles. No card required.
By completing this form you are agreeing to our Terms and Conditions for the provision of a free trial of Capital Economics' services. We take your privacy seriously and will not share your details with others without your consent. By providing your details, including your email address, you are consenting to Capital Economics sending you macroeconomic commentary and analysis. You can unsubscribe at any time. See our Privacy Policy for more information.

Already a client or trialist? Log in to read this.