Europe may face deeper recession than in 2008

Indicators in the field of lending by banks show that the economies of Europe have entered a deep recession, Report informs referring to UnHerd.

The bank lending data implies that European economies are now deep in recession. It also suggests that this recession is even more violent than that of 2008-09. While the financial crisis started slowly before becoming gradually more severe, this forecast indicates that the present recession might start violently.

“Euro area firms’ net demand for loans decreased strongly in the second quarter of 2023,” the authors write, “dropping to an all-time low since the start of the survey in 2003.” This means that commercial loan demand is now lower than it was in the depths of the credit crunch of 2008-09, particularly worrying since high energy prices are currently putting pressure on European firms.

There are other indications that Europe is not undergoing a recession. The unemployment rate, for example, is currently very low whereas in 2008-09, the last time bank lending survey numbers were so dire, it was rising rapidly.

“But either way, the bank lending survey data demonstrates that the European economy is in a very tough spot,” reads the report.