ECON Note - The impact of the recession in 2008-2009 on EU regional convergence

Description

This note on regional convergence provides a first assessment of the impact of the crisis on convergence in Europe. Due to long delays in releases of regional data, the in-depth analysis allows for conclusions for the 2008-2009 period and only some indicative considerations for the remaining period. The note concludes that convergence slowed down substantially in 2008-2009 after nearly a decade of rapid convergence. EIB lending to convergence regions rose significantly during the recession in 2008-2009, helping to leverage more European structural funds. This inflow of capital substituted the withdrawing of private capital to some degree and likely provided a buffer against the severe economic shock. For the regional convergence to resume its pre-recession pace, it is of utmost importance for convergence regions to re-invent the economic model that brought about the higher productivity growth rates before 2007.