West Midlands set to be fastest growing region outside London and the South East

Simon O'Neill

The West Midlands is expected to be the fastest growing UK region outside of London and the South East in terms of its economic performance over the next three years.

The strength of the its manufacturing sector and the recent announcement of Coventry as the 2021 City of Culture are expected to bolster the region’s economy.

According to EY’s latest UK Regional Economic Forecast, the region will see growth of 1.8% in its Gross Value Added (GVA) each year until 2020.

The region’s performance will be in line with UK average growth (1.8%) but is ahead of the East Midlands (1.7%), North West (1.5%) and Scotland (1.5%).

The forecast concludes London and the South East will continue to outperform all other UK regions through to 2020 with GVA growth per year of 2.2% and 2.0% respectively.

The EY forecast concludes 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 (albeit at a slower rate than previously) leading up to 2020.

Supporting the stronger picture is the West Midlands’ robust employment picture, which has 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 year – just behind the UK average of 0.4%.

This year, Birmingham has experienced strong growth with an increase of 3.7% 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%, although it will still outpace both the West Midlands (0.3% growth) and UK average (0.4% 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 £50m 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.”

He added that GVA growth in northern and devolved regions was expected to be relatively slower than that in the south.

Although there were still reasons to be optimistic.

“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,” added Mr O’Neill.

“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.”

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