More Foreign Direct investment Is Key To Supporting The Levelling Up Agenda
A new economic report reveals that Leeds will be among the top ten cities in the country for employment by the end of 2023, creating over 19,000 new jobs, compared to 2021.
According to Irwin Mitchell’s latest UK Powerhouse report, produced by the Centre for Economics and Business Research (Cebr), Leeds will be one of the few Northern cities to improve in terms of job creation by the end of 2023. Leeds is expected to go from 9th in the table in Q4 2021, to an impressive 6th place by the close of 2023 with 2% year-on-year growth, resulting in the number of jobs in Q4 2023 standing 19,200 above the corresponding 2021 value.
The city posted 6.2% economic growth by the end of Q4 2021, which left Leeds the 26th best performing in terms of GVA*. In line with other Northern cities, economic output in Leeds is projected to slow down next year with the city expected to post 1.7% year-on-year growth in GVA by Q4 2023y the end of 2023.
The strong employment performance of Leeds is in contrast to its regional rivals, and while nearby Sheffield delivered similar economic output in Q4 2021, Leeds’ record on job creation is significantly better in 2021 and projected to be better still by Q4 2023.
Employment growth in Leeds has been driven by the construction sector and is reflective of the number of infrastructure projects underway in Leeds and the wider West Yorkshire region. This includes the development of new student accommodation and office space in Leeds city centre.
Eight of the top 10 fastest growing cities in the UK by Q4 2023 are however expected to be located in the South and East of England.
The UK Powerhouse report also examines the latest trends in Foreign Direct Investment** (FDI) into the UK.
Yorkshire sits 5th in the regional table for FDI but improving this position in the future is seen as an important step if Leeds and other Northern cities are to improve economic output and if the government’s own levelling up agenda is to be realised.
Bryan Bletso, partner and Head of International at Irwin Mitchell, said: “Leeds continues to deliver a consistent performance in the UK Powerhouse report. Its employment prospects continue to stand out, which makes good reading for the future of the city and the West Yorkshire region.
“This comes despite the loss of the HS2 connection, which while a blow to the construction industry, is not expected to dent employment prospects in the medium term. How far the loss will impact the benefits that improved transport connectivity would bring remains to be seen.
“While transport and construction will remain important, the report shows that FDI continues to be a key driver for economic growth and is behind much of the continued success enjoyed by cities in the South.
“With Leeds now the northern hub for the Bank of England and infrastructure bank, the city is ideally placed to emulate Manchester in the financial services sector and use its new status to attract a bigger slice of financial services to the region.
“How far the city can do this will play a big part in the levelling up agenda but with local and national government on side and supportive policies, the more FDI Leeds can attract, the better for the Yorkshire region as a whole.
“Success here should see economic output rise to compliment the city’s employment figures but there remains a lot of work still to do to translate double digit FDI projects in Yorkshire into the hundreds enjoyed by other regions.”
Josie Dent, Managing Economist at Cebr and one of the report’s authors, said: “The economy is still expected to face some turbulence between now and the end of next year, notably through volatility in commodity prices, supply chain pressures, and the emerging cost-of-living crisis domestically. All of these factors are set to impact growth both at the aggregate level and, to a varying extent, within individual cities.
“This report highlights that much of the fastest growth during next year will be concentrated in the South. Locations such as Milton Keyes, Cambridge and Oxford have economies which are dominated by fast-growth sectors and they have also been hot spots for overseas’ investment. If economic levelling up is to be tackled effectively, these two issues must be recognised and quickly addressed.”
* GVA – Gross Value Added (the total value of goods and services produced)
** Foreign Direct Investment (FDI) refers to cross-border flows where an investor establishes a lasting interest in a subsidiary located in a country that is not the investor’s. Typically, 10.0% or more of the organisation’s voting power should be controlled by the foreign investor for this to represent a lasting interest.