Region will lag for next three years, says report
NEWCASTLE and Sunderland are being forecast to see elements of growth above the national average over the next three years but the North East as a whole is set to fall further behind London and the South East, a new report suggests.
Figures from the latest EY Regional Economic Forecast say that Newcastle is expected to see average annual employment growth of 1.4% from 2024-2027, outstripping the national average rate of 1.1%. The city’s annual Gross Value Added (GVA) growth rate is expected to be 1.9% over the same period, the same as the national rate.
Meanwhile, Sunderland is being forecast to record annual GVA growth of 1.7%, though its expected annual employment growth of 0.7% is expected to trail both the national and regional rates.
Nationally, EY said that while all areas of the UK are set to see moderate economic growth over the next three years, London and the South of England were likely to outpace the rest of the country due to issues in the regional labour market and higher numbers of high growth companies in the capital.
Stephen Church, EY’s North market leader, said: “The North is home to fantastic towns and cities, along with ambitious businesses and an abundance of talent. This means that the region will be well-placed to feel and contribute to the benefits of the UK’s return to economic growth over the next few years.
“Major cities including Newcastle, Leeds and Liverpool are once again expected to be a driving force for economic growth in the North and across the UK. Meanwhile, Manchester is poised to maintain its status as an economic powerhouse, fuelled in part by its flourishing tech sector.
“Nevertheless, it is important that locations across the North utilise their unique strengths to drive growth. There are still a significant number of places in the North expected to trail quite considerably behind national and regional averages both in terms of GVA and employment, highlighting room for improvement.
“Going forward, it is critical that the public and private sectors collaborate to maximise opportunities. Leaders and businesses in the North should prioritise building skills and capabilities that will be in demand across high-growth sectors, while making the most of our region’s fundamental strengths such as our industrial prowess in the North East and Yorkshire, and our technology expertise in the North West.
“The high levels of economic inactivity must also be addressed and policymakers should consider incentives and programmes to encourage people back into work.”
EY’s report highlights long-standing issues in the North East economy and forecasts that Durham, Hartlepool, Stockton, Middlesbrough and Darlington will also see growth below national averages. It said that high levels of inactivity - which it pegs at 20.7% in the North East - are partly to blame for the lagging regional economy.
EY said that the UK remains the only major world economy the labour market participation rate has not yet returned to the level it was at pre-pandemic.