Yari

What Europe’s Reopening Means for Economic Growth

Jari Stehn, Yari, Liz

Goldman Sachs forecasts a robust 2021 European economic rebound driven by vaccine rollouts, projecting 7.1% GDP growth for the UK and 5.1% for the Euro Area despite near-term infection risks. The recovery will feature significant divergence, with Germany returning to pre-pandemic activity levels by the third quarter ahead of Italy and Spain due to its exposure to the global industrial cycle and stronger fiscal support. This optimistic outlook is further bolstered by massive excess household savings estimated at 30% of GDP in the UK and 15% in the Euro Area, which could accelerate consumption if restrictions ease as anticipated.