Economic rebalancing before 2020 unlikely, says EY

Efforts by government to rebalance the UK economy are thus far failing to make an impact, with EY’s UK Regional Economic Forecast reporting a slight increase in geographic imbalance between the South and the rest of the country – an imbalance it expects to grow between now and 2020.

However this, the third annual report from the Big Four firm monitoring the performance of the UK region, declares Manchester’s “robust” performance in growing GVA in recent years a triumph of policy, saying “substantial investments made over more than a decade” show “what can be achieved with the right focus and resources”.

More challenging yet, says EY, is the challenge facing towns in the regions, the main victims of the trend to city living. According to the Centre for Towns, with which EY has collaborated, for three decades now the working-age populations of small and medium-sized towns has been decreasing, with the obvious outcome being a fall in productivity.

EY says: “When we compare our regional forecasts it is clear that the strong are getting stronger. City growth, especially for large cities, typically outpaces regional growth which means that the towns and other areas within regions are growing more slowly. Geographic imbalances exist within regions as well as between them and these local disparities are proving the most challenging to address.”

A proposal from EY is for an enhanced version of the recently-launched Industrial Strategy, saying that the limited number of sector deals needs to be extended:

“If we are serious about geographic rebalancing, we need a manufacturing strategy that goes beyond deals announced so far. The automotive resurgence in the Midlands shows what is possible, and other capital-intensive industries, such as, machinery, electronics, food and drink and chemicals all offer the opportunities to boost exports and to substitute imports and support growth outside of the core cities.”

The North West as a region has performed well over the last three years, narrowing a productivity gap between it and the South East that had previously been among the fastest-growing. Over the last three years, the region has grown GVA by more than 2%, although EY expects that to slow to 1.5% in the period to 2020.

The full report can be downloaded here.

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Why is Manchester outstripping London? Because it has had sustained investment in transport,infrastructure and research and development. When will the penny drop with Westminster that you have to speculate to accumulate?

By Elephant

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