The European Union faced challenging economic conditions in 2012, with an intensifying sovereign debt crisis in the euro zone, the spectre of a double-dip recession for several countries and weakening growth in even the better-performing countries.
The year 2012 was from the perspective of the European Union characterised by a recession that started at the end of 2011 and is linked to the financial crisis and unsustainable debt levels. Real GDP growth dropped to -0.3%. The unsustainable accumulation of debt in the private and public sector, combined with uncertainty over the macroeconomic situation and asset quality as well as adverse credit conditions, has triggered substantial balance-sheet adjustments in several European states. Corporate debt levels have started to fall gradually since 2009, but weak economic activity and its negative impact on corporate profitability interrupted this decline in 2012.
The economy of European Union was in 2012 influenced especially by three interrelated factors – the banking crisis, sovereign debt problems and the crisis of competitiveness.
Source : Deloitte