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UK Regional Economic Forecast

Rebalancing the economy: a complex challenge

Overview

Our Regional Economic Forecast has found that UK growth is set to be more geographically balanced over the next three years, but there has been little progress towards reducing imbalances in the previous.

However, 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 share some of the key findings

 

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.
  • 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.
  • Find out more about how the regions performed in 2018 .
EY - UK Map

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. Improved connectivity, both physical and digital, will be critical in ensuring that the economy is one in which everyone has a chance to participate fully, regardless of location.

Mark Gregory

Chief Economist, UK

 

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