Manchester set to outpace UK economic growth between 2024 and 2027, finds EY report

4th March 2024, 1:52 pm

Manchester is forecast to outpace the UK’s economic growth rate between 2024 and 2027, according to EY’s latest Regional Economic Forecast.

When measured by Gross Value Added (GVA), Manchester’s economy is expected to see annual average growth of 2.2% between 2024 and 2027, comfortably outpacing the national growth rate (1.9%). The only other major town or city to see faster growth over the same period will be Reading (2.5%).

However, the North West is expected to see annual average growth of 1.7% between 2024 and 2027, trailing behind the national growth rate.

Manchester is also expected to record the second-fastest rate of employment growth of all UK towns and cities from 2024 to 2027, with job numbers in the city forecast to grow 1.7% per year over the period. Employment across the North West is expected to grow by 1% annually across the same period, a slower rate than the expected employment growth for the UK (1.1%).

By 2027, GVA in Manchester’s local economy is expected to be more than £2.4bn larger than in 2023, driven in part by the city’s buoyant tech sector. The information and communication sector is expected to be among the UK’s fastest growing industries between 2024 and 2027 with average annual GVA growth of 1.9%, but in Manchester this is expected to reach 2.4%.

Elsewhere in the North West, Liverpool’s economy is forecast to see 1.8% annual average growth from 2024 to 2027 – marginally below the national rate but slightly ahead of the regional average. Meanwhile, Liverpool is forecast to see employment grow by 1.2% a year over this period, outpacing both the national and North West averages.

The region’s manufacturing, real estate and wholesale and retail trade sectors are expected to remain the leading contributors to GVA in the North West between now and 2027. The construction, information and communication, human health and social work, and professional, scientific and technical sectors are also expected to see significant growth from 2024-2027.

Stephen Church, EY’s North Market Leader, said: “The North is home to fantastic towns and cities, along with ambitious businesses and an abundance of talent. This means that the region will be well-placed to feel and contribute to the benefits of the UK’s return to economic growth over the next few years. Major cities including Newcastle, Leeds and Liverpool are once again expected to be a driving force for economic growth in the North and across the UK. Meanwhile, Manchester is poised to maintain its status as an economic powerhouse, fuelled in part by its flourishing tech sector.

“Nevertheless, it is important that locations across the North utilise their unique strengths to drive growth. There are still a significant number of places in the North expected to trail quite considerably behind national and regional averages both in terms of GVA and employment, highlighting room for improvement.

“Going forward, it is critical that the public and private sectors collaborate to maximise opportunities. Leaders and businesses in the North should prioritise building skills and capabilities that will be in demand across high-growth sectors, while making the most of our region’s fundamental strengths such as our industrial prowess in the North East and Yorkshire, and our technology expertise in the North West. The high levels of economic inactivity in the North West and North East must also be addressed and policymakers should consider what sort of incentives and programmes can encourage people back into work.”

Varied outlook across North West towns and cities

Outside of Manchester and Liverpool, Chorley has reasons for optimism, with forecast average GVA growth of 1.9% per year between 2024 and 2027 – outpacing the regional average, while in line with the national rate. Similarly, Chorley’s employment growth is also expected to be in line with the national average and slightly faster than the overall North West rate, with 1.1% annual average growth forecast.

Lancaster’s annual average economic growth between 2024 and 2027 (1.8%) is also expected outstrip the regional average, despite slightly trailing the national rate, while the city’s annual average employment growth (1.1%) is expected to be in line with the national rate, outpacing the North West average over the period.

Meanwhile, Blackburn, Rochdale and Wigan are all forecast to see their annual GVA growth (1.6%) fall behind the national and regional rates between 2024 and 2027. Wigan is forecast to see employment growth of 0.9% per year over the period, while Blackburn and Rochdale are both expected to see 0.8% annual growth respectively, meaning all three are projected to see employment trail both the national and regional growth rates.

Preston is expected to see slightly slower GVA growth from 2024-2027, with an annual average of 1.4%, while employment is forecast to grow by 0.7%. Cumberland and Warrington are also expected to see their annual average economic growth fall significantly behind the national rate over the same period, with each forecast to see 1.3% GVA growth. Warrington is forecast to see 0.6% employment growth, while Cumberland is predicted to see the region’s slowest annual employment growth from 2024-2027, with 0.4%

Blackpool’s employment growth (0.5%) is expected to be slightly faster than Cumberland’s, although the seaside town’s annual average GVA growth is expected to be the slowest in the region (1.1%).

Nationwide disparity in sector mix and economic inactivity set to persist

Looking across the UK, lower inflation and the prospect of interest rate reductions will lay the foundations for a return to historical levels of growth between 2024 and 2027. London and the South East are forecast to achieve annual GVA growth of 2.1% and 2% respectively, while the South West is expected to see 1.9% growth. Every other region is forecast to grow at a slower rate than the UK average.

This can partly be attributed to the lower concentration of high value sectors in some parts of the UK. For example, the professional services and information and communication sectors are expected to be among the fastest growing sectors for GVA between 2024 and 2027, with average annual growth rates of 2.1% and 1.9% respectively. However, by 2027 the two sectors combined will comprise just 9.9% of all employment opportunities in the North East, 10% in Yorkshire and the Humberside, 8.2% in Wales and 8.9% in Northern Ireland. In comparison, by the same year they will comprise 14% of employment opportunities across the UK, but 16% of employment opportunities in the South East and 23.1% in London.

There are also significant variations in labour market participation across different parts of the UK and there appears to be a correlation between lower growth and higher levels of economic inactivity. Northern Ireland has the highest level of inactivity, at 25.7%, almost three percentage points higher than in any other region. The North West (22.9%), Wales (22%) and the North East (20.7%) also have relatively high levels of inactivity, compared to the UK average (18.3%). The lowest rates of inactivity can be found in those regions expected to match or exceed the average UK economic growth rate over the next three years – the South West (14.7%), London (14.9%) and the South East (15.9%).

The UK remains the only major Organisation for Economic Co-operation and Development (OECD) country where the labour market participation rate has not yet returned to the level it was at pre-pandemic. In 2023 the economic inactivity rate across the UK was 18.3%, which is a rise from 17.5% in 2019.

Next Article

Smart Works Fashion & Fizz event 2024

What makes you happy? Is it fashion, is it friends, is it connecting with like minded individuals or is it […]
Read Article