EU-15 growth in labour productivity per hour dropped from 2% in 1981-1995 to 1.6% in the 1995-2000 period and then to 1.3% in 2000-06. This slowdown in GDP per employed person may be explained by cyclical conditions (low capacity utilisation), lower investment (less capital deepening) and by smaller growth rate of total factor productivity. Over the past thirteen years, labour productivity growth in Europe has fallen behind growth rates in the United States, reversing the pattern of growth since the Second World War.