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Boom time for Manchester

Manchester is forecast to remain one of the UK’s strongest performing cities for the next two years.

A new report from accountants EY with its annual employment growth top of the city league tables and GVA a close second.

The annual UK Regional Economic Forecast found that Manchester’s employment growth will be 1.2% a year, equivalent to 16,300 new jobs.

Employment gains are expected to come from strong performances in administrative support and business services, transportation and storage sectors as well as healthy growth in the consumer sectors.

Meanwhile, GVA will see a predicted annual increase of 2.2% between 2018 and 2021 – ahead of London and just 0.1% behind top performer Reading, which sees its comparative employment growth at 0.9%.

Manchester leads the growth tables in a majority of service sectors in terms of GVA and it will continue to outpace the North West and UK benchmarks.

However, the figures still reveal a slowdown compared to the previous three-year period, where it was the UK’s fastest growing city at 3.8% growth a year in 2015 to 2018 for both GVA and employment.

This reflects an overall slowdown in the UK’s economic growth, particularly in the traditionally strong south.

The gap in growth rates between manufacturing and the services sector has also narrowed and has been a key factor in shaping the relative levels of change in activity across the UK.

Liverpool is predicted to see average annual GVA growth more than double to 1.5% a year through to 2021 (compared to 0.7% between 2015 and 2018).

Employment growth is expected to follow the general trend with a reduction in growth from 1.7% (2015 to 2018) to 0.5% (2018 to 2021).

The North West is also predicted to have an annual GVA growth rate of 1.5% to 2021, with its growth being largely underpinned by the business services sector.

The North West is forecast to slightly underperform the UK as a whole, which is predicted to have GVA growth of 1.7% a year to 2021.

The North West has performed strongly since 2015, narrowing the gap with the growth leading regions, and benefited from its diversified economy.

Employment growth is also expected to be driven by the business service sector, offsetting a decline in public sector jobs and also in manufacturing.

Manufacturing has grown over the last three years and employment has increased as a result.

However, it is expected to grow more slowly over the next three years as technology is used to drive higher productivity in a more challenging labour market.

The report says that a slowdown in the retail sector, especially on the high street, also poses significant challenges for smaller towns and communities as retail tends to be a major employer in these locations.

North West employment is expected to grow at 0.5% a year to 2021, in line with the UK as a whole (0.5%), as a result of this anticipated shift in the labour market over the next few years.

Bob Ward, North West senior partner at EY, said: “Manchester’s success is much lauded and rightly so – that the city is once again leading the UK with comparatively strong employment and GVA figures is of course great news.

“However, it’s time for the debate to move on and for local public bodies and government to start solving the puzzle of driving growth across this region’s other cities and towns. One great success story is not enough – we should have similar growth stories across Lancaster, Salford, Preston and Carlisle.

“I am heartened to see that Liverpool’s GVA growth is predicted to improve significantly over the next three years when other cities are seeing growth slow. Diving into the detail, that is driven by a general increase across a range of sectors but particularly noticeable is a considerable increase in GVA growth from the information and communications sector, albeit from a low base.

“The North West region is fortunate to have a fairly mixed economy and therefore it remains resilient and sits middle of the pack in terms of predicted GVA growth, albeit slightly below the UK average.

“To drive it up that league table there is of course the widely reported requirement of better infrastructure and connectivity.

“But there is also a need to reskill our labour market and focus on the huge opportunity presented by digital and technology. Take Reading, its dominant information & communications sector comprises almost a quarter of its total GVA, and is forecast to expand by 3.5% annually over the next three years.

“The national figures clearly show that one of the big priority areas for policy-makers should be an investment in skills.

“It is vital that we enable the UK workforce to respond to a more challenging and changing labour market.

“When skills development is viewed in the context of geographic imbalances, it’s clear that more of the activity on skills and education has to be shaped at a local level and not ‘top down’.

“We would also like to see a comprehensive assessment of the retail sector and the policy needed to support the transformation of our UK high streets. This should go beyond just business rates and also consider planning approaches, environmental issues, the costs of the online supply chain and alternative models for high streets.”

Mark Gregory, EY’s chief economist, said: “The recent slowing services sector growth has limited further increases in the geographic differences between North and South.

“While there are positive and encouraging signs in some areas, the forecast shows that rebalancing is a more significant and complex challenge – particularly at a local level. Radical thinking and targeted policy action will be needed if the UK is to truly see the benefits of a more balanced economy.”

 

Source: The Business Desk