The Birmingham Chamber expects a tough phase as a report suggests slowdown in region’s economic growth
The rate of economic growth within Birmingham will slow during 2016, according to a new report, which also highlights that the Government’s plan to turn the Midlands into the ‘engine’ of the UK economy is struggling to gain traction.
Law firm Irwin Mitchell’s latest UK Powerhouse report, which has been produced with the Centre for Economic and Business Research (Cebr), provides an estimate of gross value added (GVA) and job creation within 40 UK cities 12 months ahead of the Government’s official figures.
Highlighting a general slowdown in the economy, the study reveals that although Birmingham’s economy expanded by 2.5 per cent in the 12 months to Q3 in 2015, the rate of growth in 2016 is expected to fall slightly to 2 per cent.
The total value of the goods and services produced in Birmingham is expected to increase to £23.3 billion in the next 12 months. During the same period, the report predicts the number of jobs created in Birmingham will increase by 1.4 per cent.
The level of growth expected in Birmingham in 2016 is the same as Greater Manchester and Leeds and ahead of Sheffield (1.8 per cent) and Edinburgh (1.9 per cent).
Birmingham’s forecasted growth outperforms other cities in the region such as Coventry (1.9 per cent), Wolverhampton (1.4 per cent) and Stoke-on-Trent (1.6 per cent). Cities in the East Midlands fared similarly with Derby set to grow by 1.8 per cent and Leicester by 1.6 per cent. Nottingham is set to be the strongest performer with GVA set to increase by 2.2 per cent.
Looking further ahead, the report’s projections for the next ten years still show that London will continue to grow at a much faster rate than other parts of the UK.
Irwin Mitchell’s report forecasts that by the third quarter of 2025, London’s economy will have grown by 26.9 per cent since 2015. Over the next 10 years, Birmingham’s GVA is predicted to grow by 19.5 per cent. Greater Manchester’s GVA is predicted to grow by 18.3 per cent with other large cities in the North expected to record similar increases with Leeds and Liverpool growing by just under 18 per cent, Sheffield 15 per cent and Newcastle recording a 17 per cent increase.
The value of the economic gap between London and the West Midlands currently stands at £247 billion and is expected to reach £325.9 billion in 2025 according to the study.
Irwin Mitchell produced its first UK Powerhouse report in October 2015. The report predicted a growing economic gap between the South East and the North of England and made nine policy recommendations along with a call for the government to radically rethink how it looks to rebalance the UK’s economy.
Chris Rawstron , head of business legal Services at Irwin Mitchell in Birmingham, said: “The government has said that it supports plans to build the Midlands into the engine room of the UK, however this latest report shows that there is still a lot of work to be done.
“Similar to many other parts of the UK, business confidence in the region is being affected by concerns over the global economy, as well as policy uncertainty in the UK – particularly over membership of the European Union. The continuation of government deficit reduction, subdued export markets and the likelihood of an interest rate rise, looks like our region’s economy is set to battle stronger headwinds to growth in 2016.”