EY Regional Economic Forecast 2024: An Uneven Return To Growth

12th March 2024

The UK economy ended 2023 on a disappointing note — having confounded expectations and avoiding a recession in the first half of the year, it suffered that fate in the latter half. Although, it just about managed a tepid 0.1% growth for the year as a whole. This was a consequence of a combination of high inflation and rising interest rates squeezing consumer spending power and putting pressure on corporate margins.

While all areas of the UK are set to see a return to moderate economic growth over the next three years, London and the South of England are expected to outpace the rest of the country due to regional imbalances in sector composition and the labour market, according to the EY Regional Economic Forecast from EY ITEM Club.

The new report also highlights how UK regions fared over the last 12 months and includes an analysis of prospects for the UK's towns and cities, and sectors have again played a crucial role as locations buck regional and national trends.

In brief:
Economic momentum is set to return to all parts of the UK between 2024 and 2027, but London and the South East are forecast to see faster GVA growth than the UK average

UK employment set to grow by 1.1% annually but London (1.5%), the South East (1.3%) and the South West (1.2%) are expected to exceed that

All other locations are forecast to see employment grow at a slower rate than the UK average

London and the South East accounted for 39% of overall UK GVA in 2023, compared to 36% in 2005, and EY forecasts this will rise to 40% by 2027

The EY report indicates that the growth gap is being exacerbated by the UK's post-pandemic rise in labour market inactivity, with the highest levels found in Northern Ireland (25.7%), the North West (22.9%) and Wales (22%)

Read the full report HERE
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