Euro area countries have experienced their most severe recession of the post-war era, alongside other OECD economies, followed by a sovereign debt crisis in some euro area countries. This has been the first major test of the resilience of the euro area since monetary union. The end of a prolonged global credit and asset price boom around mid- 2007 led to turmoil in interbank markets, which intensified into a full-blown international financial crisis from September 2008 after the failure of Lehman Brothers. World trade dropped sharply and there was a rapid retrenchment of private consumption and investment, exacerbated by low confidence and financial sector weakness. Unemployment has increased significantly, although a substantial fall in average hours worked helped to accommodate the weakness of labour demand. While headline inflation rates have been volatile, underlying inflationary pressures have weakened as the result of the scale of economic slack.