For the euro area as a whole, 5 years ahead growth expectations among forecasters have been falling continuously since 2001, from around 2.7% then to 1.4% today. As a result, the economic environment is characterised by seeping pessimism about the prospects for long-term growth. This matters for two reasons.
First, it holds back a stronger recovery, as uncertainty about the future can feed back into weaker investment today through expectations and confidence channels. It is surprising, for example, that businesses currently perceive themselves to have limited excess capacity, despite a large estimated output gap.