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UK Regional Economic Forecast

Rebalancing the economy: Time for a new push

Overview

Our regional economic forecast has found that no progress has been made in rebalancing the UK economy geographically over the last three years and the economic divide between the North and South of the UK will continue to expand over the next three. Of even more concern, the weaker parts of the economy – smaller cities and towns – will fall further behind the largest cities.

London and the South East will continue to outperform all other UK regions through to 2020 with Gross Value Added (GVA) growth per year averaging 2.2% and 2.0% respectively, compared to 1.79% for the wider UK. London is also expected to enjoy the fastest increase in regional employment up to 2020, growing at an average of 0.8% per year.

Manchester is forecast to be the strongest performing city in terms of both GVA and employment growth, with annual increases of 2.4% and 1.2% per year respectively between 2017 and 2020.

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Key findings

  • The South continues to outpace the North, with London and the South East leading the growth through to 2020 with GVA growth per year averaging 2.2% and 2.0% respectively, with little sign of the gap narrowing over the next three years.
  • Technology will be a key component of UK growth, with the ICT sector expected to achieve GVA growth of 3.5%. Manufacturing is also forecast grow by 1% over the same time period.
  • Manchester is forecast to be the strongest performing city with 2.4% GVA growth and 1.2% employment growth per year between 2017 and 2020. Highlighting the strong are set to get stronger, with successful cities such as Manchester and Reading outperforming the average regional growth; demonstrating the scale of the re-balancing challenge.
EY - UK Map

The UK has to view geographic rebalancing as a key component to the process of transforming the economy. However the scale of the challenge should not be underestimated. With the requirements to prepare for Brexit, position for technological change and maintain its competitiveness, the UK needs to invest more than it has done for some time."

Mark Gregory

Chief Economist, UK

 

Contacts