UK economic growth gap will shrink between London and regions
UK growth is set to be more balanced across the country over the next three years up to 2021, research from EY has revealed.
Slower growth in the services sector, EY's UK regional economic forecast report said, will have a negative impact on the south of the UK and not so much the improvement in performance of other regions, allowing them to catch up.
The gap between the fastest and slowest growing regions over the next three years will be 1.2% - significantly less than from the 3.5% in 2015-2018.
London is expected to continue to outperform other regions through to 2021 but gap will get smaller with gross value added growth per year of 2.1%, down from the 2.5% growth seen between 2015 and 2018.
Brexit uncertainty will cause the gap between London and the other regions to be smaller over the next three years with the West Midlands (1.7%), the South East (1.7%), and the East (1.6%) in the following three positions.
London is also expected to hold the fastest increase in regional employment up to 2021, growing at an average of 0.9% per year, falling from 2.5% from 2015-2018. The West Midlands follows with an increase of 0.6%, and then the East Midlands, East and South East all on 0.5%
Mark Gregory, EY’s chief economist comments: “In the three years since our first regional forecast, there has been little reduction in the imbalances between the South of England and the rest of the country. However, the recent slowing services sector growth has limited further increases in the geographic differences between North and South.
“Radical thinking and targeted policy action will be needed if the UK is to truly see the benefits of a more balanced economy.”
Mark Gregory adds: “The UK’s approach to geographic rebalancing must identify how smaller cities and towns, and the more remote parts of the country, can benefit from the success of the faster-growing Core Cities. Improved connectivity, both physical and digital, will be critical in ensuring that the economy is one in which everyone has a chance to participate fully, regardless of location.”