Manchester will become the fastest growing city outside of the south of England over the next three years, according to a report by EY.
It says Manchester’s recent strong performance shows what is possible with long-term economic focus, but investment in the Chancellor’s ‘Northern Powerhouse’ is unlikely to bear fruit until the next decade.
The new ‘EY UK region and city economic forecast’ predicts that the region’s economy will grow by 2 per cent a year in gross value added terms (GVA) between 2015 and 2018, compared with a wider UK average of 2.3 per cent.
This performance means that, over the next three years, the north west will be the UK’s sixth fastest growing region of 12 analysed, behind London (3 per cent), the South East (2.5 per cent), the East of England (2.4 per cent), the South West (2.2 per cent) and the East Midlands (2.1 per cent).
The north west is expected to experience GVA expansion of 1.8 per cent and employment growth of 0.8 per cent in 2015 alone, buoyed by the performance of Manchester.
It will be the fastest growing city outside of the south of England over the next three years, recording GVA expansion of 2.5 per cent a year– outpacing the wider UK thanks to its strength in the professional and digital sectors.
EY estimates that Manchester will see employment growth of 4,300 jobs in 2015, representing a rise of 1.2 per cent to outperform both the north west and the wider UK.
Professional, scientific and technical services are expected to lead this growth, gaining 1,300 jobs.
Simon Allport, north west senior partner at EY , said: “Our report predicts that the North West’s economic growth over the coming years will be steady, supported by a buoyant property market relative to much of the rest of the UK, and its strong financial and manufacturing sectors.
“However, the forecast also points to a clear growth gap over the next three years between the Northern regions and those in the South of the country, which are set to benefit from good corporate investment and growth, healthy property markets and strong migration levels.
"To close this gap, regional expansion needs to be addressed at a national policy level, as well as through devolved measures and infrastructure investment – both of which are already a Government focus and have drawn significant attention.”
According to EY’s report, the Government’s ‘Northern Powerhouse’, which involves measures to help the Northern regions flourish and contribute to re-balancing the UK economy, will have limited impact in the short-term.
Mark Gregory, EY’s chief economist, UK & Ireland, said: “Our forecast predicts that the impact of the Northern Powerhouse and national infrastructure projects will only really start to be seen after 2020.
"HS2 will not open for another decade and the devolution of powers to cities such as Manchester and Liverpool will only become fully effective when budgets are aligned and funds are used efficiently.
"It will take time for the benefits to translate into real growth.”
