The data released by the OECD for 2nd quarter GDP for the EU shows clearly the shape of Europe's new economic downturn. The situation is dominated by the decline in fixed investment – see charts below.
In the US$ Parity Purchasing Power (PPP) terms in which the OECD now releases such data EU GDP, in inflation adjusted terms, is still $307 billion below its peak in the 1st quarter of 2008. However EU fixed investment is down by $485 billion – that is the decline in fixed investment more than accounts for the entire fall in EU GDP. EU consumer expenditure is also down, by $122 billion, but this is only one quarter of the decline in fixed investment. Net trade and government consumption are positives.
In short the EU’s economic situation, as in the developed economies as a whole, is dominated by the fixed investment decline.