Research Briefing | Jul 16, 2021

Europe | Cities are recovering, but uncertainties remain

Copy of Ipad Frame (35)

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.
Back to Resource Hub

Related Services

Industrial property

Post

US: High debt costs suggest an industrial correction

The scale of the increases in debt costs, coupled with the low-yielding environment makes some repricing highly likely for gateway US industrial markets over the coming quarters.

Find Out More
Office building in London

Post

High debt costs suggest European office price correction

Our analysis suggests a 10% correction is needed on average for the major office markets in Europe to compensate for the higher cost of debt, with prime yields required to soften by 10bps-75bps to generate a low-risk interest coverage ratio at a reasonable LTV.

Find Out More