Europe | Cities are recovering, but uncertainties remain
European cities are on the road to recovery, as the improving health situation and gradual lifting of restrictions provide the foundation for a consumer-led revival. But the economic environment remains shrouded in uncertainty, with risks still skewed to the downside, albeit to a lesser extent than earlier in the pandemic.
What you will learn:
- European cities have emerged from a difficult start to the year thanks to the gradual lifting of social restrictions. We expect a strong consumer led rebound through the rest of 2021 and into 2022, which should be sufficient for GDP in most cities to have returned to pre-pandemic levels by the end of next year.
- But the recovery could be easily knocked off track. In our moderate downside scenario, the return to pre-pandemic levels of GDP and employment is delayed by a year. And a more severe downside risk, perhaps due to the reintroduction of social restrictions that derails the consumer recovery, would see most city economies fall back into recession in 2022.
- Whilst the risks to our baseline outlook are tilted to the downside, a stronger bounce back can’t be discounted. The most likely driver would be a more vigorous recovery in consumer spending than is currently anticipated, and whilst all cities would benefit, those most reliant on social consumption would reap the greatest gains.
Tags:
Related Services

Post
Latin America Key Themes 2024 – Slower growth, but it’s not all bad news
Growth in most LatAm economies will be below consensus. Economic momentum has surprised to the upside through most of 2023, but the full effects of record global and domestic monetary tightening are yet to be seen.
Find Out More
Post
Easing financial conditions offer CRE some respite
Our measure of financial conditions has become less restrictive in the US and started to loosen in the eurozone and the UK, reflecting investors' expectations that interest rates have peaked. This should aid the outlook for commercial real estate (CRE) on the margins, although the scale of past rate hikes, sluggish economies, and structural headwinds mean the sector still confronts challenging fundamentals.
Find Out More