Purpose: Economic growth is defined as growth in the capacity to meet individual and collective consumption demands. Decline in economic growth for a longer period (i.e. recession) occurs as a part of the “The Limits of Growth” concept. During such an economic crisis, three policy concepts can be implemented: “austerity”; “business as usual”; and “fiscal stimulus”. The purpose of this paper is to examine the economic response to the 2008 recession, in the area of sustainable transport system development, in Europe. Design/methodology/approach: The study assesses and identifies the need for investments in transport infrastructure, in particular rail, to remove barriers to developing a sustainable multimodal transport system. Towards this, by analysing secondary data collected from relevant online sources, the paper explores the prospects for sustainable rail freight transport development in Europe, during the recession period. For this, eight EU countries were selected, based on the length of railway lines in use: France, Germany, Italy, Poland, Romania, Spain, Sweden and the UK. Findings: Investment in five transport infrastructures were examined – road, rail, IWT, maritime ports and airports – and the research finds that overall, the “austerity” policy was implemented for investment in rail infrastructure, whereas a modest “stimulus” policy can be observed for investment in road infrastructure. The average investment in IWT infrastructure had a “stimulus” policy, whereas the average investment in Maritime port and Airport infrastructure suggests a “business as usual” policy. Of the various approaches taken in the recent recession period, European rail transport appears to have fared least well. Research limitations/implications: To some extent, the research is limited by lack of some data (e.g. data unavailability on the UK airport infrastructure investment from year 2006). Practical implications: The findings of the research will encourage policy makers in national government to invest in sustainable transport infrastructure. Originality/value: The study suggests that there is a lack of uniform policy response to the recession, in terms of investment in transport infrastructure, and that there is a significant difference between the policy goals set by the EU – modal shift from road to rail and/ IWT to develop a sustainable transport system – and their practice. The author argues for an integrative, common and action-oriented approach to sustainable rail freight system development, by European countries, to develop effective, Europe-wide rail freight corridors, under schemes such as Horizon 2020 and Shift2Rail.