Victoria Square, Birmingham
The West Midlands is expected to be the fastest growing UK region outside of London and the South East in terms of its economic performance.
The region will secure 1.8% Gross Value Added (GVA) a year until 2020, according to EY’s UK Regional Economic Forecast.
The region’s performance will be in line with UK average growth (1.8%) and is ahead of other UK regions including the East Midlands (1.7%), North West (1.5%) and Scotland (1.5%).
London and the South East will continue to outperform all other UK regions through to 2020 with GVA growth per year of 2.2% and 2.0% respectively.
EY’s forecast says there has been little progress on the geographical rebalancing of the UK’s economy in the last three years and the economic divide between the North and South of the UK will continue to expand (albeit at a slower rate than previously) leading up to 2020.
Employment in the West Midlands has also seen a resurgence, with 110,000 more jobs recorded in June 2017 compared with the previous year – the largest absolute increase of any UK region.
Looking ahead to 2020, total employment in the West Midlands is expected to increase by 0.3% per year – just behind the UK average of 0.4%.
This year, Birmingham has experienced strong growth with an increase of 3.7% in employment levels, with 20,500 new jobs in the city.
In the period to 2020, Birmingham’s total employment growth is expected to slow to 0.5%, although it will still outpace both the West Midlands (0.3% growth) and the UK average (0.4% growth).
“With the pace of manufacturing expected to slow after 2017 and 1,400 fewer jobs forecast in the sector by 2020, strong growth in professional services, scientific/technical and construction are expected to offset declines in manufacturing and public services.
“With Coventry recently announced as City of Culture in 2021, we can expect an economic boost to the city and wider region in the run-up to 2021, and then a likely boost in the year itself.
“The experience of Hull in 2017 suggests a boost to GVA of over £50 million is possible with the potential to create more than 1,500 jobs.
“Even more important will be taking the opportunity to increase awareness of the city to boost tourism and business investment in future years.”
GVA growth in northern and devolved regions is expected to be relatively slower.
The North East is forecast to experience the slowest rate of GVA growth between 2017 and 2020, growing at 1.2% per year. It is also the only region where employment is expected to decline, falling by 0.1% per year between 2017 and 2020, with the largest declines projected in the manufacturing and public administration sectors.
Simon continued: “The UK has made little progress on regional rebalancing over the past three years, and we expect more of the same leading up to 2020.
“In fact, we expect that some of the fastest growing regions over the next three years will be the four most southerly ones, London, the South East, the South West and the East.
“This means that the economic gap between North and South could be larger in 2020 than it was in 2010.
“Along with the success of southern regions, the Midlands Engine has driven investment and focus into this region
“The rebalancing problem is
Our BQ Bulletin emails will land in your inbox at 7.30am, Monday to Friday, with a mix of the latest local business news, national news, and features to inspire you. Sign up here!
Click here to read our privacy statement