OVERVIEW Escalating financial The economic situation is exceptionally uncertain. The financial crisis crisis... deepened and broadened this autumn with the banking sector at the eye of the storm. Important policy measures have been undertaken by governments in both the US and the EU as well as by central banks to restore financial stability. Nonetheless, the EU and euro-area economies cannot escape the negative effects of the financial distress. Not least because in several countries it comes on top of severe housing-market corrections, which in turn have been further aggravated by the financial crisis. These shocks have put a brake on domestic demand at a time when external demand is fading. The EU and euro-area GDP growth, thus, is expected to come to a stand-still in 2009 in both the EU economies at a stand- and the euro area, implying a downward revision of about 1½ pps. since the still next
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