The euro-zone stands on the brink of a deep recession which will encompass all member states. Emerging European economies have less scope to loosen policy in response to a drop in euro-zone output than they did in 2008, meaning that many will also experience a short, shallow recession this year. The exceptions will be Poland and Russia, which should maintain some positive momentum. In the remaining developed European economies, the outlook is weakest in the UK and Denmark. Over the next 12-18 months, the weakening outlook for economic activity and occupier demand will more than offset the any support offered by loose monetary policy and low bond yields.