The global and European economies are gradually coming out of the worst recession ever recorded since data on GDP exist. Yet this recovery is clouded in uncertainty. The pandemic is still with us causing sporadic lockdowns and continuing damage. Contagion remains widespread in many countries and there are growing fears about new variants which could turn out to be more dangerous and/or difficult to contain.

The return to growth is sharply divergent. Prospects are most favourable in the world’s two largest economies: the United States and China, thanks to very expansionary policies in the first case and successful containment of the pandemic in the second. Europe’s recovery, on the other hand, is more hesitant, slowed down as it is by a sluggish vaccination campaign (outside the United Kingdom) and by more prudent policies than those pursued in the US. Despite an expected relatively sharp rebound this year, a return to 2019 levels of activity is very unlikely before 2022.

Thereafter, growth should hopefully return to its trend rate of about 1½ to 2 percent per annum, but the pandemic will have left lasting traces on levels of both public and private debt and on rising inequality. The former may restrain future spending, the latter could drive renewed upsurges of populism.

Want to get a more detailed economic assessment? Make sure to tune in on the second day of the FINAT European Label Forum 2021 and listen to Professsor Andrea Boltho, economist and lecturer at the Oxford University. Register now!