Brexit fallout: Growth set to halve for city
Gloomy economic forecast after vote to leave EU
ECONOMIC growth in Birmingham is likely to more than halve following the referendum to leave the EU, according to a new forecast.
The report by the Centre for Economic and Business Research and Irwin Mitchell, reveals Birmingham’s economy is now expected to grow by only 0.6 per cent in the 12 months to the first quarter of 2017.
Economic output had been expected to grow by 1.8 per cent during the period.
Chris Rawstron, of Irwin Mitchell, said: “All of the cities in the region are expected to see growth rates slow significantly and, although there are signs of recovery into 2018, output is still anticipated to be lower than it would be if the referendum vote had gone the other way.”
THE impact of the UK’s decision to leave the EU is expected to more than halve economic growth in Birmingham and other West Midlands cities over the coming year, according to a new report.
The UK Powerhouse report, produced by the Centre for Economic and Business Research (Cebr) and law firm Irwin Mitchell, provides an estimate of gross value added (GVA) and job creation within 38 of the UK’s largest cities, 12 months ahead of the Government’s official figures.
It said that, despite the continued momentum in the UK car industry, which provided a noticeable boost to economies within the region in the first three months of 2016, the study reveals that Birmingham’s economy is now expected to grow by only 0.6 per cent in the 12 months to the first quarter of 2017. Think tank Cebr had expected economic output in Birmingham to grow by 1.8 per cent during the period but has now lowered its forecast following the UK’s decision to leave the EU in June’s referendum.
Looking further ahead, the report suggested the economy within Birmingham was expected to lift to an annual growth rate of 1.2 per cent by the first quarter of 2018 – still below the figure of 1.6 per cent which was the level predicted before the Brexit decision.
The latest analysis suggested that in the first quarter of 2017, GVA in Coventry would grow by 0.7 per cent rather than 1.7 per cent, and 0.4 per cent in Wolverhampton instead of 1.4 per cent. In Stoke, GVA was expected to be at 0.5 per cent rather than 1.6 per cent.
Chris Rawstron, head of business legal services at Irwin Mitchell in Birmingham, said: “These forecasts demonstrate the significant challenges that many businesses face in the West Midlands.
“All of the cities in the region are expected to see growth rates slow significantly and, although there are signs of recovery as we move through 2017 into 2018, output is still anticipated to be lower than it would be if the referendum vote had gone the other way.
“These results show that recovery rates of cities within the UK differ considerably and this clearly demonstrates the need for economic rebalancing is stronger than ever.”
Perhaps unsurprisingly, London’s economy was predicted to be the worst hit by the Brexit vote with GVA growth expected to be 0.4 per cent instead of 2.4 per cent by the first quarter of 2017.
Niall Baker, chief executive at Irwin Mitchell’s business legal services division, added: “Dealing with this current economic uncertainty presents a tough challenge for many businesses and, following Brexit, there could well be further instability.
“Although it’s going to take some time to understand the full impact of the referendum result, many organisations are already considering a wide range of legal issues in order to ensure they’re as prepared as they can be for a future when the UK is no longer in the EU.”