The entire
economy of the European Union declined by 0.1 percent in the second quarter of 2008. A
European Commission forecast predicted Germany, Spain and the UK would all enter a recession by the end of the year while France and Italy would have flat growth in the third quarter following second quarter contractions.
Denmark Denmark showed a contraction of 0.6 percent in the first quarter of 2008 following a contraction of 0.2 percent in the fourth quarter of 2007. Revised data for Denmark, however cancelled the early recession, as GDP ended at +1.0% in Q4 2007 followed by −1.4% in Q1 2008 and +1.5% in Q2 2008. So according to revised data, the Great Recession only started in Denmark in Q3 2008.
Latvia Latvia's gross domestic product fell 0.2 percent in the second quarter following a fall of 0.3 percent in the first quarter.
Switzerland Economists at
Switzerland's second-largest bank predicted a recession in 2009.
Estonia Estonia saw an economic contraction of 0.9 percent in the second quarter of 2008, following a 0.5 percent contraction in the first quarter, but with the revised data showing no recession before Q3 2008.
Slovakia Slovakia was one of only a few countries that retained their high GDP predictions for the year 2008.
Poland Poland is the only member of the
European Union to have avoided recession, meaning that in 2009 Poland created the most GDP growth in the EU. In 2010, the Polish economy registered a 3.2% annual rate of growth, exceeding the previous forecast of 2.7 per cent, and outperforming the EU average of 1 per cent. Poland had one of the lowest
external debt rates in the European Union, at just over PLN 776.8 billion (€179.1 billion), 54.9% of its GDP.
Iceland The
Icelandic króna has declined 40% against the euro during 2008 and has experienced inflation of 14%.
Iceland's interest rates have been raised to 15.5% to deal with the high inflation. This
loss of currency value has put pressure on banks in Iceland, which are largely dependent on foreign debt. On 29 September 2008 Iceland's
Glitnir was effectively nationalized after the Icelandic government acquired 75% of the bank's stock. According to the government the bank "would have ceased to exist" within a few weeks if there had not been intervention. Iceland's Prime Minister
Geir Haarde in a television address on 6 October 2008 said credit lines to
Icelandic banks had been cut off and that "the
Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could be national bankruptcy" and that the government was looking to other countries for sources of liquidity. The parliament went on to seize control and nationalize Iceland's second largest bank,
Landsbanki, on 8 October 2008. The Parliament also extended a £400m loan to the nation's largest bank,
Kaupthing, in hopes that it would strengthen the institution's
balance sheet.
Chancellor of the Exchequer Alistair Darling announced that the UK government would foot the entire bill, estimated at £4bn, and that he was taking steps to freeze the assets of Landsbanki. The following day, Darling used the
Anti-Terrorism, Crime and Security Act 2001 as the basis for seizing the assets of
Landsbanki Islands hf, an Iceland-based bank. Icelanders launched an on-line petition drive to protest this action, which is seen as comparing Icelandic banks with
Al-Qaida. Iceland's GDP is expected by economists to shrink at least 10 percent as a result of the crisis, putting Iceland by some measure in an
economic depression.
Hungary On 10 October 2008, the
Forint dropped by 10%. The
European Central Bank (ECB) announced on 16 October that it was bailing out
Hungary with a 5 billion euro (US$6.7 billion) loan facility, just days after the
Hungarian Finance Ministry said it was seeking consultations with the
International Monetary Fund (IMF) about a possible support package. The ECB's unprecedented move in bailing out a non-euro state underlines the crisis unraveling in Hungary and its possible impact on the rest of Central Europe. Several players will be affected, but at particular risk are the
Austrian banks which invested so heavily in the region. A potential serious hiccup of the Austrian banks could mark a significant blow to Europe's already troubled banking system. Hungary, which joined the European Union in 2004, has been hit hard by the current financial crisis due to its heavy dependence on
foreign capital to finance its economy and has one of the biggest public
deficits in the EU. Prior to the international bailout, the government had feared the worst, including a collapse of the
national currency, Prime Minister
Ferenc Gyurcsány said. In November Hungary has received a $25 billion cash injection from the International Monetary Fund to save it from financial collapse. In December, the IMF transferred $5 billion and the ECB $2 billion.
Bulgaria On 10 June 2009 Bulgarian authorities declared the country was officially in recession with its economy shrinking 4.2 percent from January to June. The Bulgarian economy contracted by 4.8 percent year-on-year in the second quarter for the first time in 12 years. Unemployment is rising rapidly. The agriculture sector registered a 6.6-percent decline in activity in the second quarter of 2009 compared to the same period last year, while industry shrank by 9.8 percent. The services sector meanwhile grew by 0.3 percent. Bulgaria's imports during the first half of this year compared to January–June 2008 contracted by 24.2 percent and exports declined by 18.2 percent.
United Kingdom bank branch in the United Kingdom, to withdraw money from their accounts The
economy of the United Kingdom has also been hit by
rising oil prices and the
credit crisis. Sir
Win Bischoff, chairman of
Citigroup, spoke of his belief that house prices in Britain would fall constantly for two years from the end of 2007. The
Ernst & Young Item club predicted growth of only 1.5 percent in 2008, slowing to 1 percent in 2009. They also predicted
consumer spending would slow to only 0.2 percent, and forecast a two-year drop in investment. The
Institute of Directors’ quarterly business opinion survey showed business optimism at its lowest level since the survey began in 1996. Deputy Governor of the
Bank of England,
John Gieve, said inflation would accelerate "well over" 4 percent while economic growth is "slowing fast". Bank of England Governor
Mervyn King said there may be "an odd quarter or two of negative growth", following the first quarter of 2009. Gieve said he couldn't rule out the UK economy heading into a recession, adding the economy was "quite a long way" from the end of the slowdown.
Nationwide, the UK's biggest building society, warned the UK could head into a recession after house prices in July 2008 fell 8.1 percent from the previous year. Housing prices declined by 1.7 percent in July, double the decline recorded in June.
Standard & Poor's said on 30 July 2008 that 70,000 homeowners were in
negative equity and it could rise to 1.7 million or about one in six homeowners in the UK based on an expected 17 percent decline into 2009. The Bank of England reported that mortgage approvals fell by a record of nearly 70 percent. In
Northern Ireland, house sales saw a fall of some 50 per cent according to a survey by the
University of Ulster/
Bank of Ireland and housing prices fell on average by 4 percent. British manufacturing activity declined by the most in almost a decade in July, the third consecutive month of declines. The number of companies that went into administration in May–July 2008 was 938, an increase of 60 percent compared with the same period in 2007. The number of company liquidations in the second quarter of 2008 rose to 3,689, a 16 percent increase and the highest quarterly figure in five years. House builders expected the number of houses built in 2008 in
England and Wales to be the lowest since 1924. The declines were seen as an indication the United Kingdom had a high chance of entering a recession. Factory production in the UK dropped 0.5 percent in June 2008 when twelve out of 13 categories of factory production fell. The economic output of the UK was reported to have increased by just 0.2 percent in the second quarter 2008, the joint-slowest pace since 2001. The value of sterling relative to other currencies dropped by around 30%. The
Office for National Statistics later gave a revised number saying growth in the British economy was at zero, the worst since the second quarter of 1992. The current slowdown has ended 16 years of continuous economic growth, the longest period of economic expansion in Britain since the 19th century. A report from the
National Institute for Economic and Social Research said the economy contracted by 0.1 percent in the period from May to July 2008 and 0.2 percent from June to August 2008. A voter backlash due to the personal financial effects of the global credit crunch was widely attributed by politicians of the United Kingdom
Labour Party, which had been in power since 1997, as the reason their political fortunes took a dramatic downturn through May 2008, with a succession of defeats in by-elections and the
London Mayoral election, and the worst opinion poll result in their history. Political opponents countered this apparent excuse by pointing to the fact that the incumbent Prime Minister
Gordon Brown, who had taken office in June 2007 just before the crisis broke, had been the country's '
Iron Chancellor', and had allegedly not ensured the country had sufficient monetary reserves to be able to lower taxes and ease the burden on voters, despite overseeing one of the longest sustained periods of economic growth in the country's history. In August 2008 the party also faced calls to impose a
windfall tax on the utility companies, who were reaping record profits due to the fuel crisis, perceived as in bad taste given rising food and fuel prices. On 17 September 2008, news emerged that the banking and insurance group
HBOS (Halifax Bank of Scotland) was in merger talks with
Lloyds TSB about creating a UK retail banking giant worth £30bn. The move received the backing of the British government which stated that it will over-rule any claims from the competition authorities. According to the
Office for National Statistics unemployment claims in August 2008 increased by 32,500 to reach 904,900. The wider Labour Force Survey measure found joblessness rose by 81,000 to 1.72 million between May and July, the largest increase since 1999. In September 2008, British bank
Bradford & Bingley's £20 billion savings business was acquired by Spanish bank
Grupo Santander. While its retail deposit business along with its branch network will be sold to Santander. The mortgage book, personal loan book, headquarters, treasury assets and its wholesale liabilities will be taken into public ownership. From 1 December 2008, the UK Government made the decision to cut
VAT from 17.5% to 15% for 13 months in an attempt to encourage a big spend from UK shoppers before Christmas, and again in the run-up to Christmas 2009. On 4 December 2008, the
Bank of England cut interest rates from 3% to 2%, which amounted to the lowest level since 1951. On 8 January 2009, the Bank of England reduced rates even further, from 2% to 1.5%, the lowest level in its 315-year history. On 23 January 2009, Government figures from the
Office for National Statistics showed that the UK was officially in recession for the first time since 1991; with a 1.5% fall in gross domestic product during the final quarter of 2008 being the sharpest for 28 years. On 5 February 2009 interest rates were cut further from 1.5% to 1%. A February 2009 research on the main British
insurers showed that most of them are not considering officially raising
insurance premiums for the year 2009, in spite of the 20% raise predictions made by
The Daily Telegraph or
The Daily Mirror. However, it is expected that the capital liquidity will become an issue and determine increases, having their capital tied up in investments yielding smaller dividends, corroborated with the £644 million underwriting losses suffered in 2007. On 5 March 2009, the Bank of England cut interest rates yet again, from 1% to 0.5%. The same week, it announced that it would begin a policy of
quantitative easing, printing up to £150 billion of new money. Figures published in March 2009 by the Bank of England revealed that over $1 trillion in foreign holdings had been withdrawn from UK banks between spring and the end of 2008, representing a huge loss of confidence in UK financial institutions. By November 2008, unemployment had risen to over 1.8 million (compared to less than 1.7 million at the start of the year and less than 1.5 million as recently as 2005) and by early 2009 had exceeded 2 million, the highest since 1996. It was feared that unemployment could reach 3 million during 2010 – a level not seen since the 1980s. However, the end of the recession in the United Kingdom was declared on 26 January 2010, by which time unemployment stood at nearly 2.5 million. A peak of almost 2.7 million was reached in late 2011. A report by the
ONS produced in March 2009 stated that the UK economy shrank by 1.6 percent during the last quarter of 2008, with a 1% drop in household spending. A further decline of up to 4% GDP during 2009 was predicted. In April 2009, it was reported that first quarter GDP had shrunk by 1.9 percent, with a prediction of a 4.1 percent drop for the year. The largest contributor to this figure was manufacturing output, which fell by 6.9 percent over the quarter. In May 2009,
Standard & Poor's cut its rating outlook for the UK to negative. Official figures also showed that British public borrowing hit a record high for the month of April, the first month of the new tax year – net public borrowing came in at £8.5bn in April 2009, compared to April 2008's figure of £1.8bn In June 2009, the figure for the first quarter GDP drop was revised downwards from 1.9 to 2.4 percent, with economic output falling 4.1% from the previous year. Revised figures also showed that the recession began in Q2 of 2008, rather than Q3 of 2008 as previously reported. In the 3 months to May 2009, the unemployment rate showed a record quarterly rise of 281,000 to stand at 2.38 million – which represented 7.6% of the working population. In the three months to June, the number of job vacancies fell to a record low of 429,000, down by 35,000 from the previous quarter. By the end of June 2009, the public sector debt stood at £798.8 billion, equivalent to 56.6% of GDP, the highest percentage since records began in 1974. This compared to £641.4 billion or 44.4% of GDP in June 2008. The figure is expected to rise still higher when the costs of bailing out
RBS and
Lloyds Bank are added. By August 2009, UK unemployment stood at more than 2.4 million, the highest since 1995. The Bank of England announced that due to the deepening recession in the UK, it would be extending its quantitative easing program to a new total of £175 billion. In November 2009, The Bank of England announced it would be adding a further £25 billion in continuation of quantitative easing in assisting the UK economy through the recession. In December 2009, it was revealed that the UK's unemployment total stood at almost 2.5 million – another monthly rise and the highest level for 15 years – but the number of people claiming unemployment benefit had actually fallen by more than 6,000. By this stage, the UK was one of the last major economies still in recession. However, on 26 February 2010 it was revealed that the UK economy had grown by 0.3% within the last quarter of 2009 and the UK was out of recession. However, many economists were still unsure of the situation – the relatively small drop in unemployment benefit claimants could be attributed to seasonal jobs, and with a general election imminent, the government had every reason to present the best economic picture possible. Other factors which could have produced an artificially high growth rate included the end of the "cash-for-clunkers" car replacement scheme, and the ending of a
VAT cut from 15% to 17.5% in January causing many consumers to push forward their purchases. In addition, £200 billion had been pumped into the economy via QE, and the central bank rate had been held at almost 0% for most of the year. Thus although official figures showed that the UK had indeed exited recession fears of a double-dip recession remained. According to the IMF, the UK economy had grown slower than that of Portugal or Italy in 2010. The popularity of Britain's
Labour government, led by prime minister
Gordon Brown since June 2007, slumped dramatically during 2008 and 2009, with low rankings in opinion polls, dismal performances in local and European elections, and losing several seats in parliamentary by-elections. The
Conservative opposition, led by
David Cameron, won the most votes and seats in the
2010 general election, but fell short of an overall majority, and agreed a
coalition with the
Liberal Democrats in order to form a new government. The new government faced numerous economic challenges, namely re-establishing economic growth, reducing the national deficit and reducing unemployment, not to mention a host of social problems, many of which had been intensified as a result of the recession.
Romania Despite high economic growth in 2008 (8.7%),
Romania was affected very hard by the crisis, analysts forecasting a contraction of 8–9% for 2009, as the new government established in the late 2008 was unable to take any anti-crisis measures.
Romania's economy has been one of the hardest hit in Europe. The country's trade deficit fell by more than 60 percent during the first half of 2009, but not because of exports taking off, but due to business bankruptcies and unemployment decreasing consumption.
Russia From 1999 until the autumn of 2008
Russia's economy grew at a steady pace, which most experts attributed to Putin's policies, a
sharp rouble devaluation of 1998,
Boris Yeltsin-era structural reforms, rising
oil price and cheap credit from western banks. After
Vladimir Putin's first term as president (during most of which
Mikhail Kasyanov held prime-ministership), some analysts described Russia's short-term economic growth as impressive and maintained that Putin was "at least partially responsible for it": a series of fundamental reforms had been implemented, including a
flat income tax of 13 percent, a reduced profits tax, and new land and legal codes. In October 2008 Russia emerged as one of the countries hardest-hit by the
global economic crisis, the stock market crash having been precipitated by
Vladimir Putin's verbal attack on
Mechel in July that year and the
Russo-Georgian War in August. In 2008, Russia's benchmark
RTS share index lost 72.4 percent, ranking it as an unusual performer of all major emerging markets. In January 2009, Russia's State Statistics Service released data, according to which the Russian
industrial production slumped in December 2008 by 10.3 percent after falling 8.7 percent in November that year. However, the Russian main stock exchange index has doubled by autumn 2009, compared to the end 2008, and, by the end of 2009, has almost reached the pre-crisis levels.
Sweden Sweden has not been severely affected, and no banks or financial institutions have had real trouble. However, some effects have been visible, mostly based on distrust and similar psychological mechanisms. The stockmarket has declined heavily, because of influence from New York and other markets. Some banks, especially
Swedbank had invested heavily in US housing bonds. The banks did not trust each other well and the difference between the
interbank interest rate and the state interest rate has gone up at least 1%. The housing loan interest rates have gone up even further. The global sales especially of cars has gone down, forcing the Swedish car industry to lay off staff and contractors. The increased fear of enduring recession and the increased financing costs have lowered company investments and private consumption. Sweden entered recession after a two consecutive quarter of economic contraction.
Sweden's economy showed zero growth in the second quarter of 2008. The Swedish GDP contracted by 0,1% during both the second and third quarters of 2008. Sweden's economy sank into recession in the third quarter of 2008. In October retail sales dropped 0.6 percent in the month, and household consumption fell 0.2 percent in the third quarter. The
Riksbank offered 60 billion kronor ($7.71 billion) in loans to financial firms at an auction, after having opened credit facilities to maintain the liquidity in the banking sector. At the beginning of December, the government launched a financial stability package to rev up the economy, while the central bank, urged by the
OECD, cut down its interest rates to 2%
Ukraine Ratings agency
Fitch warned
Ukraine could be headed for a
currency crisis as economic fundamentals deteriorate and the country enters
another period of political uncertainty. Fitch said the current account deficit was likely to widen further as prices of gas imports rise and prices of its steel exports fall and said Ukraine was likely to need to borrow more at a time when global debt markets have ground to a virtual standstill. Ukraine's central bank chief,
Petro Poroshenko, said he saw no need to intervene to protect the currency.
Ukraine was hit heavy by the economic crisis of 2008, analysts say the plights of Ukraine are slumping steel prices, local banking problems and the
cutting of Russian gas supply in January 2009. Key industries such as metallurgy and machine building are laying off workers, and real wages have started to fall for the first time in a decade.
Norway The
Norwegian government pension fund suffered an investment loss of $92 billion during 2008. However, the overall value of the fund rose due to oil sales and currency movements.
Croatia With economic growth ceasing by the end in 2008, the
Croatian economy entered a crisis that exposed numerous structural issues and un
sustainable growth mechanisms, causing the period of instability to fester until as late as 2015. The country was still in the midst of what was effectively a six-year long recession when it
became a member of the European Union in July 2013. The recession had contributed to the fall of the
Cabinet of Ivo Sanader II and its replacement with the
Cabinet of Jadranka Kosor. It was interrupted by a period of stagnation in 2011, that nevertheless led to the election of the
Cabinet of Zoran Milanović, yet the economy soon returned to recession, in which it remained until the end of 2014. ==European Economic Recovery Plan==