Report reveals forecast for value of Yorkshire’s economy in 2016 falls by £1billion

Economic growth within Yorkshire’s largest cities deteriorated in the final quarter of 2015, signalling a £1.5bn fall in the expected growth of the region’s economy in 2016, says a new report.
 
Irwin Mitchell’s latest UK Powerhouse report, which has been produced with the Centre for Economic and Business Research (Cebr), provides an estimate of GVA and job creation within 38 of the UK’s largest cities 12 months ahead of the Government’s official figures.
 
The latest study reveals that the economy in Leeds grew by 1.7pc in the 12 months to Q4 in 2015 compared to 2pc in Q3. The value of the goods and services produced however reached £20bn for the first time.
 
Growth within Sheffield’s city economy fell considerably from 1.7pc in the 12 months to Q3 to 1.3pc in the final three months of the year. Sheffield was also the only city in the study to see the number of people employed fall in the year to Q4.
 
Hull’s economy grew at the same rate as that of Leeds whilst Bradford’s growth rate fell from 1.6pc to 1.2pc.
 
In line with its projections for the UK as a whole, Cebr has lowered its forecasts for GVA in 2016 for Yorkshire as a whole. Three months ago, GVA in the region was expected to reach £106.5bn by the end of this year, but this has been revised downwards by £1bn to £105.5bn.
 
Looking further ahead, the report’s projections for the next 10 years still shows that London will continue to grow at a much faster rate than other parts of the UK.
 
Irwin Mitchell’s report predicts that by the end of 2025, London's economy will have grown by 26pc since 2015. Over the next 10 years, Leeds’ GVA is however predicted to increase by 17.1pc with other large cities in the North expected to record similar increases with Liverpool growing by 17.1pc, Sheffield at 15.1pc and Newcastle recording a 16.4pc increase.
 
The report found that Greater Manchester is expected to be the dominant city within the Northern Powerhouse in the next decade with 17.7pc expansion.
 
The value of the economic gap between London and the northern region currently stands at £62bn and is expected to reach £115bn in 2025 according to the study’s latest analysis.
 
Paul Firth, Regional managing partner of Irwin Mitchell’s Sheffield office, said:
 
“Manufacturing forms an important section of the Sheffield and Yorkshire economy. While steel no longer dominates, the well-documented issues within the UK’s steel industry has been one factor weighing on employment across the region, much as it has done in other areas of the UK. In addition to private sector job cuts, Sheffield has also increasingly seen public sector employment come under pressure and further job cuts in the City Council have already been announced.”
 
The report’s findings follow a series of announcements at the Budget last month which included a £300m pledge by the Chancellor to improve journey times between the northern region’s largest cities.
 
Mr. Firth added: “Increasing infrastructure investment to reduce journey times and improving connectivity across the north of England are vital if the ‘Northern Powerhouse’ is going to succeed.

“Not only should there be a significant increase in infrastructure spending in the north, the Government must listen to businesses when deciding where its transport hubs should be located. In Sheffield, for example, the Government’s current plan is to locate the HS2 station at Meadowhall even though the financial benefits of it being located in the city centre are shown by all the data to be manifestly far greater.”
 
Andrew Walker from Irwin Mitchell in Leeds said: “As one of the leading financial service centres outside of London, the slowdown in financial and insurance services has begun to dent growth within Leeds in the latest quarter. In the absence of a flourishing financial sector, however, growing employment in areas such as legal and accountancy services, HR and IT is helping to support growth.”
 
Irwin Mitchell produced its first UK Powerhouse report in October 2015. It predicted a growing economic gap between the South East and the north of England and made nine policy recommendations along with a call for the government to radically rethink how it looks to rebalance the UK’s economy.
 
The Powerhouse Tracker reports are a quarterly follow-on and provide a ‘nowcast’ of GVA and employment for a range of key cities across the UK. In the most recent analysis, Milton Keynes was the fastest growing city in the final quarter of 2015 and will remain to be so in 2016
 
Later this month, Irwin Mitchell in Leeds will host a UK Powerhouse event. The debate on 22 April will be chaired by David Parkin and the keynote speaker will be Hilary Benn MP.
 
For further information and to download the latest version of the report, click here.
 
To take part in Irwin Mitchell’s UK Powerhouse quiz, click here.