European economic growth since the millennium has been highly cyclical. Both countries and cities showed similar levels of growth in the lead up to the global financial crisis, at an average of 25% and 28% respectively, followed by an average of -4% in the following recession. The big difference has been in the recovery. Cities have led this.

On average, GDP in European cities has grown by 21% since the end of the latest recession compared with 15% in the countries in which they sit. The biggest risers have been Dublin, where city GDP is up 87% since 2009, Warsaw up 34% since 2008, London 27% and Amsterdam, 21%. A few cities, Moscow, Frankfurt and Brussels have underperformed their host countries.

^{Source: Oxford Economics, Savills World Research}

In the post-industrial era, the rise of cities has been closely tied to the expansion of the financial and business services sector but there are signs that this sector has been contracting in some specialist cities or in locations where the financial crisis was particularly hard felt. Madrid’s financial and insurance economy, for example, shrank by 22% between 2006 and 2016. On average, across the 12 cities, financial GVA grew by 23% in the last 10 years, while tech grew by 55%. We expect the gap in growth rates between the tech and financial sectors to continue widening.

The city economies in this study divide into three groups. We have called the four largest economies ‘Global Powerhouses’. London, Moscow, Paris and Madrid produce high levels of economic output, measured by GVA (gross value added), ranging from €193 billion to €428 billion. The four mid-size economies are the ‘Urban Accelerators’: Milan, Stockholm, Dublin and Berlin produce GVAs of between €103 billion and €139 billion. The four smaller economies are dubbed ‘Contenders’ and their economies are between €52 billion and €88 billion.

^{Source: Oxford Economics}