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European cities since 2007: Size doesn't matter

Madrid city image at night

Stefan Wundrak, Head of European Research, explains why what may drive the success of a city is not necessarily as clear as it seems. We believe it is important to consider a variety of soft and hard factors to determine a city’s unique DNA.

Over a decade has passed since markets peaked in 2007. The 10-year period had no shortage of economic events including a once-in-a-century Global Financial Crisis (GFC) followed by the Great Recession and the Eurozone crisis, as well as radical monetary policies which had never been tried before. As the recovery took hold in the last couple of years, new cracks appeared in the form of Brexit and a change of direction in US global economic and trade policy. To keep this report of a retrospective evaluation of cities simple, we have used city GDP growth as a benchmark. We stress that the success and resilience of a city depends on a lot more than just GDP growth, and that 10 years is too short a period to pass judgement on a city's future. In fact, our analysis confirms that these single factors are only one piece of a much larger puzzle.

Our report highlights the complexity of cities and the need to use a wide range of data sources to select cities into an investment universe. Cities are constantly changing and go through life cycles with periods of fast expansion, as well as stagnation and even temporary decline. Therefore, it makes sense to occasionally put cities on a hibernation list when the cycle is not in their favour. It would have been a mistake to write off London as a global city when its population declined from 8.5 million in the 1940s to 6.5 million in the early 1980s; it took until 2015 for London to surpass its former peak. Similarly, we don’t give up on The Hague, Rotterdam, Bilbao, Helsinki, Edinburgh, Frankfurt, Sofia, Bordeaux, Geneva and Rome just because GDP growth over the past 10 years was a bit underwhelming. Rome, above all, can look back to quite a few renaissances over the past 2,000 years.


European cities since 2007: Size doesn't matter Read the full report

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Stefan Wundrak

Stefan Wundrak

Head of European Research

Stefan's biography