Repairing the balance sheets of banks, households and countries will take some time (Charts 3 and 4). None of this is surprising. History suggests that recessions involving financial crises tend to be deeper and have recoveries that take twice as long.
In the decade following severe financial crises, growth rates are about one percentage point lower and unemployment rates five percentage points higher.3 The current U.S. recovery is proving no exception. In Europe, the recovery is being restrained by major competitiveness and fiscal challenges in peripheral economies, as well as the risks of contagion from under-capitalised banks.