2 minute read 11 Dec 2018
uk city street

Why rebalancing its economy will help the UK prosper

Authors

Mark Gregory

EY UK Chief Economist

Committed to using economics to drive informed decision-making in the public and private sectors. Helping rebalance the UK economy. LinkedIn Top Voice. Sports mad. Loyal supporter of Stoke City FC.

Debbie O'Hanlon

EY UK&I National Markets Managing Partner

Committed to supporting strong regional growth, entrepreneurship and opportunity for all. Married. Keen cyclist and occasional triathlete.

2 minute read 11 Dec 2018

Our Regional Forecast found UK growth set for better regional balance over the next three years, but little progress in the previous three.

H
owever, this more balanced growth profile will principally be the result of slower growth in the services sector, which will have a detrimental impact on the south of the UK, rather than other regions ‘catching up’ through improved performance.

The report also warns that growth imbalances between different places within regions will continue to increase, with cities and larger towns pulling away from their smaller neighbours.

It highlights the scale and complexity of the economic rebalancing challenge which will require radical thinking to drive more balanced growth within regions; finding ways for smaller towns to benefit from the success of their faster-growing neighbours.

Listen to Mark Gregory sharing some of the key findings.

The UK’s economic rebalancing challenge will require radical thinking to drive more balanced growth within its regions

Key findings

  • London will continue to outperform all other UK regions through to 2021, with Gross Value Added (GVA) growth per year of 2.1% – but this is nevertheless down from the 2.5% growth seen between 2015 and 2018.
  • As continued Brexit uncertainty hampers the outlook for the UK capital, the gap between London and the other regions is expected to be smaller over the next three years with the West Midlands (1.7%), the South East (1.7%), and the East (1.6%) in the following three positions.
  • The South East is the only region expected to see an increase in employment growth in the next three years compared to the previous three. A slowing economy, expected lower EU immigration and technological change are all contributing to this anticipated shift in the labour market.

London will continue to outperform other regions

2.1

The percentage EY ITEM Club expects London’s annual GVA to grow to 2021

  • Regions with a large manufacturing base enjoyed a boost last year, with the weaker sterling making exports more competitive. The West Midlands in particular benefitted from this. However, more subdued growth is expected for these regions in 2018-21.
The UK’s approach to geographic rebalancing must identify how smaller cities and towns, and the more remote parts of the country, can benefit from the success of the faster-growing core cities.
Mark Gregory
EY UK Chief Economist

Summary

Economic rebalancing is vital across the UK to increase growth across its regions and find ways for its smaller towns to benefit from faster-growing neighbours.

About this article

Authors

Mark Gregory

EY UK Chief Economist

Committed to using economics to drive informed decision-making in the public and private sectors. Helping rebalance the UK economy. LinkedIn Top Voice. Sports mad. Loyal supporter of Stoke City FC.

Debbie O'Hanlon

EY UK&I National Markets Managing Partner

Committed to supporting strong regional growth, entrepreneurship and opportunity for all. Married. Keen cyclist and occasional triathlete.