A new report by Oxford Economics estimates that just seven of Europe’s top 30 cities will see their GDP return to pre-pandemic levels this year and that the rest of the cities will have to wait until 2022, or even 2023.
However, Richard Holt, head of global cities research at Oxford Economics, says that many uncertainties still remain. “European governments are continuing to battle to defeat the coronavirus. The seven (that will recover this year) comprise a mix of Nordic and east European cities, plus Dublin and Zurich.
“Of the major cities, Birmingham may experience the largest rise in GDP in 2021, followed by Manchester, with London also doing well. But this is a reflection of the fact that UK cities, along with Spanish ones, fell particularly heavily in 2020. UK employment was generally well protected against the impact of large GDP falls.
Once government support is withdrawn, a combination of pressure on company finances and the UK’s relatively weak employment protection laws will probably cost jobs. London will, however, remain Europe’s dominant office market.”
The report estimates that over the medium-term, city growth looks set to be slightly below pre-pandemic norms, reflecting a degree of economic scarring. Eastern and Nordic cities will lead, while several southern cities will be among the weakest.
Holt adds: “In 2020, most major cities closely tracked their national economies We estimate that in 2020, Europe’s top 30 cities experienced year-on-year GDP declines that averaged 6.7%. That was the same as the average across European nations, because while some cities saw larger declines than nationally and others smaller, in almost all cases the gaps were fairly small, and overall they balanced out. That similarity between national and city performance is hardly surprising. Economic performance across Europe was dominated by the restrictions imposed by governments to contain the coronavirus pandemic, and these tended to be fairly uniform within nations, with relatively modest differences from city to city or region to region.”
