We investigate the impact of the recent global recession on European countries and regions. We first identify the heterogeneous impact of the global recession on individual European countries and regions. We then discuss three classes of explanations for spatial heterogeneity in the severity of the crisis: (i) the extent to which countries are integrated in the global economy via financial and trade linkages, (ii) differences in the institutional framework of countries and (iii) differences in their sectoral composition. We show that especially variation in the sectoral composition contributes to the variation in the effects of the current crisis, both at the country level and at the detailed regional level across Europe. © The Author 2011. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.