Forecast For Value Of West Midland’s Economy In 2016 Falls By £1.5bn

Economic growth within the largest cities in the West Midlands deteriorated significantly 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 GVA¹ 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 Birmingham’s economy grew by 2pc in the 12 months to Q4 in 2015 compared to 2.5pc in Q3. It found that the rate of employment growth increased by 4.6pc to 585,030 which although took it into the top five in the study’s league table for fastest growth, still represented a reduction from 5.6pc which was recorded in Q3.
 
Although boosted by a strong performance by the motor industry, Coventry saw its rate of GVA growth slip from 2.3pc to 1.9pc, however the number of people employed went up by 2.1pc to 168,588.

The situation was bleaker for Wolverhampton where the value of goods and services produced fell from an increase of 1.9pc to 1.5pc.
 
Meanwhile the picture for Stoke was mixed with GVA going up by just 1.6pc but employment increasing to 7.4pc. The report says that the city’s labour market continued to recover from a prolonged period of employment contraction, but adds that growth may come under pressure as key manufacturing industries remain under pressure.
 
In line with its projections for the UK as a whole, Cebr has lowered its forecasts for GVA in 2016 for the West Midlands. Three months ago, GVA in the region was expected to reach £115.8bn by the end of this year, but this has been revised downwards by more than £1.5bn to £114.3bn.
 
Irwin Mitchell’s report predicts that by the end of 2025², London's economy will have grown by 26pc since 2015. Over the next 10 years, Birmingham’s GVA is predicted to increase by 18.9pc.
 
Large cities in the North are expected to record similar increases with Liverpool growing by 17.1pc, Sheffield at 15.1pc and Newcastle recording a 16.4pc increase. 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 West Midlands currently stands at £247bn and is expected to reach £324.6bn in 2025 according to the study’s latest analysis.
 
Chris Rawstron, Head of Business Legal Services at Irwin Mitchell in Birmingham said:

Expert Opinion

“The last quarter of 2015 was a tough one for Birmingham, but the city showed great resilience in the face of some tough headwinds.

“There is clearly still much to be done to get the so-called ‘Midlands Engine’ working and announcements relating to devolution and infrastructure investment must be supported by a broad range of other policies including greater involvement of businesses in education policy and the creation of more enterprise hubs around universities.”
Chris Rawstron - Partner

Irwin Mitchell produced its first UK Powerhouse report in October 2015. The report predicted a growing economic gap between the South East and the rest of the UK 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
 
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.