South East Hotspots To Dominate Over Next Decade
The UK Government must redouble its efforts to rebalance the economy after a news report has predicted a widening gap between the South East and the North one year after the UK’s expected departure from the EU.
The UK Powerhouse study by law firm Irwin Mitchell and the Centre for Economics and Business Research (Cebr), predicts that in 2020 Q4, Milton Keynes, Reading and Oxford will be in the top three for economic growth - with no locations in the North or the Midlands in the top 10.
The forecasts are based on the assumption that an amended version of the Brexit withdrawal agreement will form the basis of the future UK–EU relationship. It also assumes a transitional arrangement will be put in place that allows a continuation of the current relationship without any major disruptions until at least 2021.
The report predicts that the 10 slowest growing locations in Q4 2020 will be dominated by locations outside of the South East with the bottom five comprising of Sunderland, Wolverhampton, Hull, Middlesbrough and Derby.
Expert Opinion“Brexit has and will continue to take up a lot of Government time, but it is vital that it refocuses its attention on rebalancing the UK economy. Our latest report reveals that very little has changed in terms of economic growth and looking further ahead, locations in the South East are expected to continue growing at a much faster rate.” Victoria Brackett - Group Chief Commercial Officer
Looking further ahead, the locations in the top 5 in Q4 2020 will continue to be in the top five for growth in economic output over the next decade.
Josie Dent, Senior Economist at Cebr said: “Economic growth in even the fastest growing cities is set to slow in the year after Brexit. In Q4 2018, the fastest growing city – Reading – is estimated to have seen annual growth of 2.7%, while in Q4 2020 Milton Keynes is set to grow at the highest rate, but will only see a 2.1% increase.”
The report also looks at how different sectors of the economy will be affected and claims that the reduced access to labour from other member nations will be felt most in the accommodation and food services sector. In order to attract workers, it says businesses may have to pay higher wages, which would likely mean that they have to raise prices in order to afford the increase in labour costs. The report expects output in the accommodation and food services sector to expand by 2.3% annually in 2019, down from 2.8% in 2018.
All forecasts in this report utilise Cebr’s central scenario. Cebr’s central forecasts are based on the assumption that an amended version of the Brexit withdrawal agreement will form the basis of the future UK – EU relationship. We further assume that a transitional arrangement will be put in place that allows a continuation of the current relationship without any major disruptions until at least 2021. On the immigration policy, we rely on the lower immigration population estimates assuming that a visa system will be implemented for EU nationals, but that the requirements (e.g. the minimum salary, the NHS surcharge payment, the application fees, etc.) would be more relaxed than they currently are for non-EU nationals requiring a visa.