Manchester forecast to be UK’s strongest performing city

Bob Ward

Manchester is forecast to be the UK’s strongest performing city until 2020, with its annual GVA (gross value added) and employment growth both top of the city league tables.

EY’s annual UK Regional Economic Forecast says that Manchester’s GVA will see a predicted annual increase of 2.4% between 2017 and 2020 – ahead of the capital and neck-and-neck with Reading – whilst employment growth will lead the pack at 1.2% a year, equivalent to almost 15,000 net new jobs.

Strong performances in the professional, scientific and technical, administrative and support services and construction sectors will be key to driving Manchester’s economy, according to the report.

While Manchester is the best performing city, the forecast figures to 2020 still reveal a slowdown compared to the previous three-year period, as GVA is expected to be 3.7% a year in 2014 to 2017 and employment growth 3.8% a year.

The forecast also reflects an overall slowdown in the UK’s economic growth, particularly in the traditionally strong south. Despite having stronger growth figures in the three-year period to 2017, Manchester was not then leading the pack.

Liverpool, meanwhile, will see GVA hold steady at 1.4% to 2020, although employment growth is expected to follow the general trend with a reduction in growth from 1% (2014 to 2017) to 0.1% (2017 to 2020).

Liverpool’s performance is much more closely aligned to the wider North West, which is predicted to have an annual GVA growth rate of 1.5% to 2020, with growth expected across all sectors except public administration.

Although it remains behind average UK GVA growth, which is predicted to be 1.8% to 2020, the North West has performed strongly since 2014, narrowing the gap with the growth leading regions, and benefitted from its diversified economy.

Total employment in the North West is expected to increase slightly over the period to 2020, growing, on average, at 0.1% a year. Declining employment is forecast within the manufacturing sector, while professional, scientific and technical services will enjoy strong growth.

The employment forecast illustrates the importance of sectors in determining growth prospects in the short to medium-term.

The report forecasts that nationally, the GVA of the information and communications sector and professional services sector will grow by 3.5% and 3.4% a year, respectively, over the next three years. In contrast, manufacturing is only expected to grow by 1% over the same period.

Bob Ward, North West senior partner at EY, said: “It’s great to see Manchester leading the country in terms of growth. It’s an exemplar of what a long-term, joined-up consistent approach to city development can achieve – attracting investment and ultimately improving people’s lives.

“There has been much talk of the ‘halo effect’ – the smaller towns around a big city also enjoying the benefits of its success. However, the wider North West GVA and employment figures in our report suggest that other cities in the region will not grow to the same extent as Manchester.

“The North West remains resilient – a result of our mixed economy – but businesses must be alive to the significant changes, principally around digital and technology, that we can expect to see across our national economy in the near future.

“The national figures clearly show that the more a region is exposed to ICT (information and communications technology) and professional and financial services, the faster the growth tends to be, as those sectors continue to drive the economy.”

Mark Gregory, chief economist at EY, said: “The Government’s recently published proposals for the UK’s industrial strategy 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. Other capital-intensive industries such as machinery, electronics, food and drink, and chemicals all offer opportunities to boost exports and to substitute imports – something that is more urgent following the fall in the value of sterling.

“It is also clear that technology will be a key component of UK growth, both within the information & communication sectors and across other sectors of the economy such as advanced manufacturing. Support for artificial intelligence is a good first step but a broader approach to digital technology to include, amongst others, virtual reality, Fintech, analytics and 3D printing is essential.”

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