The lower investment also reduces longer-term capacity and hence future potential output. In a similar fashion, there is a risk of hysteresis. This means that people made unemployed due to the cyclical downturn may remain out of employment for too long, losing valuable human capital and finally becoming structurally unemployed, a tragedy for them and their families, and a loss for society.
There is some evidence that the prolonged period of negative output gap in the euro area since the crisis has weighted on potential.