Crisis, response and innovation in Europe

Abstract

The close economic ties between Europe and the United States and the City of London’s crucial global monetary and financial role were the conduits for the lightning-fast spread of the crisis triggered by the sub-prime mortgage defaults in the U.S. and the consequent fall in global real aggregate demand. The effects of this twofold crisis differed among euro area countries, among non-euro European Union countries, and among such neighbouring non-members as Turkey and Russia. The differences appear to have been sharpest in the euro group.