In terms of its economic performance, the West Midlands is set to achieve 1.8 per cent Gross Value Added (GVA) a year until 2020, according to accountancy firm EY’s UK Regional Economic Forecast.
GVA is the measure of the value of goods and services produced in an area, and the region's performance is expected to be in line with UK average growth (1.8 per cent) – ahead of other UK regions including the East Midlands (1.7 per cent), North West (1.5 per cent) and Scotland (1.5 per cent).
London and the South East will continue to outperform all other UK regions through to 2020 with GVA growth per year of 2.2 per cent and two per cent respectively.
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 cent per year – just behind the UK average of 0.4 per cent.
This year, Birmingham has experienced strong growth with an increase of 3.7 per cent 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 per cent, although it will still outpace both the West Midlands (0.3 per cent growth) and UK average (0.4 per cent growth).
Simon O’Neill, managing partner at EY in the Midlands, said: “The West Midlands is forecast to be the fastest growing region of the UK (outside of London and the South East) leading up to 2020, with growth underpinned by strong performance in the real estate and business services sectors.
"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.”
But EY’s forecast says there has been little progress on 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, although at a slower rate than previously) leading up to 2020.
The North East is forecast to experience the slowest rate of GVA growth between 2017 and 2020, growing at 1.2 per cent per year. It is also the only region where employment is expected to decline, falling by 0.1 per cent per year between 2017 and 2020, with the largest declines projected in the manufacturing and public administration sectors.
Simon O’Neill 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, and is a contributing factor to the economic success of the East and West Midlands. The rebalancing problem is more acute within local economies and therefore a national approach is needed to ensure that smaller cities and towns, and the more remote parts of regions, can grow faster.”
Despite the bullish predictions for the West Midlands, Birmingham is a lowly 10th on the list of fastest growing cities, behind top placed Manchester and Reading.
Simon O’Neill, adds: “The Government’s recently published proposals for the UK’s industrial strategy are a welcome development and demonstrate how sectors will be key drivers of both productivity and the economy as a whole. The focus on manufacturing will help support many regions and cities that are located outside of the South East, including the Midlands.
“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.”