£225m Increase In GVA Despite Strengthening Brexit Uncertainty

Birmingham’s economy is on course to be £225m larger by the end of 2017 than it was in the three months after the EU referendum result, according to a new study by law firm Irwin Mitchell.

The UK Powerhouse report, produced for Irwin Mitchell by the Centre for Economic and Business Research (Cebr), predicts that the value of goods and services produced in Birmingham will grow by 0.7% during 2017. 

Irwin Mitchell’s report forecasts that by the end of 2017, the value of the Birmingham’s economy will be £225m larger than it was in the three months following the Brexit vote. It expects employment levels to be 3,100 higher. 

Although Birmingham’s economy is set to grow in 2017, it will be at a much slower rate than in the 12 months to Q3 2016 when it posted annual growth of 2.5%. 

According to the report, Cambridge, Oxford and Milton Keynes will be the fastest growing economies in 2017, although their expansion rates will be significantly lower than they were in the three months immediately after the EU referendum vote. The economies of Swansea, Belfast and Middlesbrough are expected to expand at the slowest rate in 2017.

Expert Opinion

“Birmingham performed strongly in the three months following the referendum result but we expect the continually unfolding political events to impact on growth over the next 12 months.

“Challenges do however bring opportunities and it is encouraging to hear that the Midlands Engine is firmly on the Government’s agenda and the significant production gap between London and Birmingham is recognised by the Chancellor. The recent announcement of a £5m investment into the Midlands Rail Hub is a good start and will go a long way towards reducing congestion across the region and helping to boost productivity.”
Chris Rawstron - Partner

Jack Coy, an economist at Cebr, said: “The delayed effects of Brexit have been in the pipeline for a while and there will be some difficult economic pressures in 2017. These are likely to be felt throughout cities across the UK, and threaten to slow growth in the short and medium term. For example, rising inflation under a sharply depreciated pound challenges profits for producers nationwide.

“With consumer spending also sapped by rising prices, and a labour market which has probably passed its peak, growth may slow across the country. Retail hubs such as Birmingham may also see spending growth soften, while consumers rein in budgets.”