In the figure below, I show an index of eurozone real GDP, from Eurostat, with 2007 fourth quarter -- a quarter in which Europe was doing OK, but certainly not experiencing inflationary overheating -- set at 100. And I compared it with a trend assuming 2 percent annual growth in potential output, a fairly conservative assumption even for Europe. Here's what it looks like:

Eurostat, author's estimate

So a huge gap has opened up between a reasonable estimate of potential output and actual output. Even if you believe that growth in Europe has picked up since the first quarter -- and that the pickup will continue -- it will take years to close that gap.