Shropshire's economy forecast to share growth of 1.7 per cent a year

The latest regional economic forecast from Ernst and Young forecasts 1.7 per cent Gross Value Added growth until 2021.

The EY report says that growth in the West Midlands will match the UK average of 1.7 per cent during the period to 2021.

The region saw economic growth of 1.6 per cent GVA in 2018 compared with the UK average of 1.3 per cent.

Its export-oriented economy continues to gain a competitive advantage from the weakness of sterling and global economic growth.

The West Midlands also recorded the biggest growth in employment of all UK regions in 2018, with 2.2 per cent growth and the creation of 52,000 jobs, the second-fastest employment growth behind London.

Looking ahead to 2021, employment growth of 0.6 per cent for the West Midlands is forecast to continue to exceed the UK rate of 0.5 per cent and is expected to be the third-fastest of all UK regions.

Most of the 59,000 additional jobs are anticipated to be in business services and construction sector, however, technological change is likely to lead to a slight decline in manufacturing employment.

EY’s forecast has identified that city growth typically outpaces regional growth, with Birmingham’s GVA growth expected to accelerate to two per cent over the period 2018-2021. Employment growth in Birmingham is also set to improve to one per cent per year until 2021 and comes just behind Manchester, which ranked first for forecast employment growth of 1.2 per cent.

Improvement

Simon O’Neill, managing partner at EY in the Midlands, said: “With the fastest regional GVA growth rate outside of London and the South East, the West Midlands has been a standout performer over recent years. Birmingham’s pace of growth at two per cent places the city ahead of both the West Midlands and the UK as a whole.

“Activity levels have improved across a range of sectors with manufacturing growing at 2.8 per cent per year on average and construction at four per cent. The region also achieved better growth in professional services and IT than the national average, demonstrating broad based improvement across the local economy.”

According to the report, UK growth is set to become more geographically balanced over the next three years. However, this rebalancing will principally be the result of slower growth in the services sector, which will have a detrimental impact on the south of the UK, rather than the regions ‘catching up’ through an improved performance.

The report says a slowdown in the retail sector, especially on the high street, also poses significant challenges for smaller towns and communities as retail tends to be a major employer in these locations.

There are also similar challenges facing the manufacturing sector. The sector has grown over the last three years and employment has increased as a result. However, it is expected to grow more slowly over the next three years as technology is used to drive productivity in a more challenging labour market.

Mr O’Neill added: “This report demonstrates how geographical imbalances not only remain within the UK economy, but are actually widening at a local level within all regions of the UK. With smaller places more vulnerable to economic downturns it is critical that we start to develop policy now to drive greater balance and security in economic activity across the whole of the UK."