Manchester is expected to be the fastest growing northern city but the north west region is still lagging behind the south.
According to the latest UK Region and City economic forecast released today by EY, Manchester is expected to achieve 2 per cent Gross Value Added (GVA) growth between 2016 and 2019, the highest of all Northern cities during this time.
However, the north west region is expected to significantly underperform UK average as London and South East continue to outstrip the north as a whole.
The reports says employment in the north west is expected to grow by just 0.5 er cent this year, compared to the UK average of 1.1 per cent.
The report forecasts that the region’s employment will fall over the 2016-19 period, reflecting the north west’s continuing reliance on the manufacturing and public sectors, with the former projected to lose a significant number of jobs.
Bob Ward, incoming north west senior Ppartner at EY said: “There is some positive news in this report on the role Manchester will play in future growth for the region. However it is also clear that more needs to be done to achieve economic rebalancing to address the gap between the north and south, especially in a slower growing economy.
“Devolution is a clear step in the right direction but enabling the regions alone will not be enough. National policy must be designed to complement regional policy through targeted initiatives to support trade, deliver infrastructure, invest in skills and support growth in key sectors.”
Manchester however is bucking the regional trend.
The city is experiencing strong employment growth in 2016. The report estimates a rise of 8,500 jobs this year, equating to growth of 2.2 per cent, significantly outpacing both the north west and UK.
Employment in Manchester is expected to grow by 0.7 per cent over the next three years.
A number of sectors in Manchester however are expected to enjoy employment growth of 1.8 per cent, including administration & support, real estate, arts and professional services sectors. This will soften the impact of losses elsewhere, in particular from manufacturing and public administration.
Looking ahead to the 2016-19 period, although GVA growth in Manchester is expected to slow to 2 per cent, this will still exceed north west predictions of 1.2 per cent GVA growth over the same period.
Bob continues: “Manchester shows how targeted initiatives can drive superior growth and clearly illustrates the opportunity geographic rebalancing presents.
“However, success requires a strategy that is based around priority sectors and integrated with region and city growth plans – we’re already seeing tangible benefits from cities in the Northern Powerhouse who are working together to maximise their potential. We also see real opportunities for the UK around life sciences and technology in particular.
“The challenge is to develop and implement the right mix of policies to drive economic growth locally.”
Mark Gregory, chief economist at EY explains: “The success of Manchester is good news but it does highlight another challenge, the power of cities. Cities are becoming increasingly important as sources of economic activity.
“This is an opportunity for geographic rebalancing to an extent but also a potential issue as it risks a concentration of activity in a small number of stronger cities. Policy for rebalancing must identify how to ensure that smaller cities and the more remote parts of regions can benefit from the success of the faster growing cities. Connectivity, both physical and online, will be critical here.”