The dramatic decline in the actual output of the European economy is considered to be more than a cyclical discrepancy from the potential output. Both the level and the growth rate of the potential output show an unfavourable development. It is an important task of economic research to identify the channels through which the financial crisis might have an impact on the level and growth rate of the potential output. The European economic policies face major challenges while trying to find those effective answers which contribute to the mitigation of the potential output losses. The impacts of the crises on the potential growth need to be reviewed in regard to potential growth factors (labour utilization, capital accumulation and total factor productivity). It is essential to reveal the transmission channels and the experiences gained during previous financial and economic crises. The paper is based on broad mid-term quantitative analyses using the production function approach. In the end alternative long-term scenarios are analyzed.