Potential growth is estimated to have fallen from 1.6% a year over the period 2000–07 to 0.7% over the first five years of the crisis.1 Skill mismatch has increased in a number of countries, in part arising from the shift in sectoral composition as the construction sector shrunk rapidly.
2 The high rates of youth unemployment are also likely to result in labour market “scarring”. The financial crisis and the bank-based nature of finance in the euro area amplified the slowdown in potential growth.