Western & Central Europe
all you need to know
Of the nineteen countries whose data PPRO draws on for this report, twelve are eurozone members. In recognition of this, much of the focus in this introductory text is on the eurozone. However, we’ve also considered the UK as a whole and examined the situation of non-EU members, such as Britain and Norway.
In 2020, the EU suffered a 6% contraction of its GDP, the eurozone 6.5%. In 2021, the EU and eurozone economies are both forecast to grow by 4.8%. The story in the UK is broadly similar, with a contraction of 9.8% in 2020 followed by predicted growth of 7.2% in 2021.
It’s worth noting that EU and UK figures are not directly comparable. When measuring the contribution of public-sector activities to the GDP, the UK’s Office For National Statistics takes output into account, such as hours spent teaching, surgical operations performed and so on. Other Western European countries measure public-sector activity based on how many employees are being paid.
In the eurozone, inflation in the middle of 2021 was 2.2%, slightly higher than the European Central Bank’s (ECB’s) 2% target. In Denmark, it was 1.7%, in Hungary 5.3%, in Norway 2.8%, in Poland 4.2%, in Sweden 1.3%, in Switzerland 0.7%, and in the UK 2.4%. In most cases, prices are increasing far faster than they were before the pandemic. It remains to be seen whether this is an artefact of the pandemic — a reaction to supply-chain blockages, the extra cost of doing business, and so on — or whether inflation has returned in earnest for the first time in decades.
Even at the height of the pandemic, there were murmurings that the ECB must soon start to wind down its quantitative easing (QE) programme. In fact, the bank announced an extra €500 billion in bond purchases at the end of 2020. Eurozone interest rates remain low at -0.5%. In the UK, the central bank interest rate was 0.1% by the summer of 2021. Like the EU, the UK is also running a QE programme, buying an extra £150 billion worth of bonds in November 2020.
By the middle of 2021, things looked good in West and Central Europe. In the EU, the economy was growing at its fastest pace in decades. There were even hopes of an acceleration of the recovery, thanks to the rapid vaccination programme. Then the Delta variant of the COVID-19 virus hit. Where infection rates had been under control, they started to climb again. As a result, the economic recovery faltered somewhat.
Quick facts about the region
Like everywhere else in the world, the immediate economic prospects for Western and Central Europeans hinge very much on the performance of their pandemic response. That factored in, the region is highly prosperous, has great logistics, and has a well-connected population. Lots of people who weren’t online a year ago are now. And many of those who were online before have changed their shopping habits and brand loyalties. There’s probably never been a better time to get into e-commerce in Western and Central Europe.