China’s strengthening export momentum is emerging as a significant threat to Europe’s economic outlook, with Goldman Sachs cautioning that major EU economies could face notable GDP losses as Beijing doubles down on an export-led recovery strategy. The investment bank has cut its eurozone growth forecasts, warning that Europe is increasingly exposed to rising global trade competition at a time of limited policy flexibility.

Giovanni Pierdomenico, an economist at Goldman Sachs, said the euro area is “particularly exposed” to the impact of increased Chinese goods supply, which risks widening the region’s growing trade deficit with China and undermining its already weakened competitive position. The bank estimates that stronger Chinese export competition will reduce eurozone GDP by about 0.5% by the end of 2029.

Germany is projected to face the heaviest hit, with real GDP expected to be 0.9% lower over the next four years due to pressure from Chinese exports. Italy is forecast to see a 0.6% impact, while France and Spain are each expected to register declines of around 0.4%.

Goldman analysts point to a sharp shift in global market dynamics: in the past five years, eurozone exporters have lost as much as four percentage points of market share to Chinese firms across major global markets. The bank estimates that for every one-dollar increase in Chinese exports, European exports typically fall between twenty and thirty cents, illustrating the scale of substitution taking place. This trend, analysts say, is steadily eroding Europe’s competitive edge.

European policymakers have announced a series of measures aimed at strengthening strategic resilience, including the Critical Raw Materials Act and the AI Continent Action Plan. But Goldman Sachs remains doubtful that these initiatives will be enough to counter China’s export dominance. Analyst Filippo Taddei notes that the EU’s response is constrained by structural vulnerabilities — particularly its heavy reliance on China for key components and raw materials.

Goldman warns that while selective action against certain Chinese products is possible, broader restrictions could disrupt supply chains central to Europe’s industrial activity. At the same time, the bank highlights that many EU programmes intended to shore up competitiveness remain underfunded relative to their ambitions.

Defence is the only sector where Europe has committed substantial financial resources, with the Readiness 2030 programme backed by €150 billion in loans under the Security Action for Europe scheme. Even this effort, however, relies on Chinese supplies of rare earth elements essential for advanced military systems.

The bank concludes that without a more unified and assertive industrial strategy, Europe risks losing further ground in global markets it once dominated. Policymakers now face difficult decisions over how to reinforce Europe’s industrial base while managing its dependence on Chinese inputs — and how long the region can rely on fiscal support and consumer strength to cushion its economy against mounting external pressures.

A decade after the Brexit referendum, the UK economy has significantly diverged from its pre-2016 path, with a new report showing that prolonged uncertainty and reduced business investment have left the country substantially weaker than comparable advanced nations.

The analysis, published by the Decision Maker Panel at King’s College London, estimates that by early 2025 the UK economy was about 8% smaller than it would have been had it remained in the EU, based on national macroeconomic data. Firm-level data suggests a slightly smaller but still substantial gap of around 6%.

Researchers say the drag did not come from a single shock but from years of hesitation across the business landscape. Political turbulence, shifting trade rules and repeated negotiations led companies to freeze or delay investment, hiring and expansion. Instead of concentrating on new products or growth strategies, managers redirected time and resources toward contingency planning and adjusting to evolving regulations.

“Investment is estimated to have been 12% to 18% lower, employment 3% to 4% lower, and productivity also 3% to 4% lower than it would have been if the UK had not voted to leave the EU,” the report states.

The effects have varied across sectors. Companies most deeply tied into European supply chains — many of them high-productivity exporters — absorbed the hardest impact. Researchers describe the Brexit shift as a rare example of a “reverse trade reform,” noting that barriers were raised rather than dismantled.

While trade volumes did not collapse immediately after the referendum, the study highlights that this was partly because existing EU rules remained in place for several years. The major break came when the Trade and Cooperation Agreement took effect, marking a clear divergence in the UK’s trading conditions.

As the 2010s gave way to the post-Brexit era, the UK’s economic position slipped against other advanced economies. The report estimates that UK GDP per capita has grown between 6% and 10% less than similar countries, placing the country around the 10th percentile among its international peers.

Researchers also concluded that many early forecasts, although directionally correct, underestimated how persistent uncertainty would be. What policymakers initially viewed as a temporary period of adjustment has become an extended structural shift affecting investment behaviour, productivity performance and confidence.

The findings outline a picture of a country reshaped not by a single political decision but by years of diverted business energy and weakened competitiveness. Almost ten years after the referendum, the report argues, the economic effects continue to ripple through the UK, with little indication that the long-term drag has yet begun to ease.