Modest economic growth predicted for Yorkshire and the Humber in 2019-20
The latest UK Economic Outlook by PwC reports that economic growth across Yorkshire & the Humber is likely to be in line with that of the UK, growing by around 1.1% in 2019 and 0.9% in 2020.
The report stresses its prediction assume an orderly exit from the EU, and notes that regional productivity across Yorkshire and the Humber is about 17% below the national average.
According to the report, economic growth has slowed over the past two years primarily due to a dampening of business investment, resulting from both a lack of clarity over Brexit as well as heightened global trade tensions.
Although consumer spending has continued to drive the UK economy, supported by recent rises in real incomes, a cooling housing market coupled with slower jobs growth means there is likely to be only moderate consumer spending growth of around 1.2% in 2019 and 1.4% in 2020.
However, the UK GDP could still be boosted by 4% – or £83bn – if local areas with below-average productivity levels could make up half of the gap, according to the outlook.
The report examines UK regional productivity, revealing wide variations in domestic productivity per job, as well as from an international perspective. PwC concludes that UK output per worker is around 10-15% behind Germany, France and Sweden and more than 30% behind the US.
Regional productivity gaps are large, with output per job in London around 40% above the UK average, but around 17% below the national average (£54,300) across Yorkshire & the Humber (£44,953).
John Hawksworth, chief economist at PwC commented: “Places that are better connected physically and have access to skilled workers tend to have higher productivity levels.
“We find, for example, that a 1% increase in skills is associated with a 2% increase in productivity in a local area.
“Similarly, physical connectivity also matters, which reinforces the case for increased investment in transport infrastructure for areas that tend to lag behind, whether in the North of England or the far South West such as Cornwall.
“The prize from closing the regional productivity gap could be large. If LEPs that are performing below the UK average can close 50% of this gap in productivity performance, it could add around £83 billion to the economy, equivalent to almost 4% of GDP.
“Yorkshire and the Humber could see the largest percentage increase (13.5%), followed by Wales (10.7%).”
