Jobs in London and Southern England are expected to grow at a faster rate than the rest of the UK, as economic growth picks up between now and 2027.
According to forecasts from accountancy firm EY, UK employment is set to grow by 1.1% annually, but this will be exceeded in London (1.5%), the South East (1.3%), the South West (1.2%) and the East of England (1.2%). All other regions are expected to see employment grow at a slower rate than the UK average.
EY’s UK regional economic forecast for February 2024 estimates that between 2024 and 2027 the UK as a whole will see a 1.9% increase in gross value added (GVA) – the value generated by the production of goods and services – which will in turn generate investment in jobs.
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.
All other regions are likely to see GVA increase at a rate below the UK average. The slowest rates of GVA growth are expected in the North East (1.6%), Wales (1.6%) and Scotland (1.5%).
Rohan Malik, EY UK&I managing partner for government and infrastructure, said: “While the UK’s prolonged period of economic stagnation should come to an end this year as all regions return to growth, the benefits will not be felt equally across all parts of the country. The UK’s longstanding geographic inequalities means that many of the country’s high-growth sectors have coalesced around a select few locations, and these areas will reap the biggest rewards as the country returns to prosperity in the coming years.
“Nurturing high value sectors can boost resilience in tough times and accelerate growth in better years, but doing so requires regions to build their own tailored growth plans that consider which industries are set to flourish and how to cultivate them locally.
Jobs growth
Increase in young people not in work or education
“High value sectors will require a high value workforce, so building in-demand skillsets and competencies with latest technology should help a region attract investment while bolstering the local economy.”
The fastest-growing sectors for both GVA and employment are set to include professional services and technology. Jobs in the professional services industry are predicted to increase by 1.9%, while tech jobs will increase by 1.6%.
However, jobs in these sectors will be concentrated in certain parts of the UK. By 2027 the professional services and tech sectors combined will represent just 9.9% of all employment opportunities in the North East, 8.2% in Wales and 8.9% in Northern Ireland, but in the South East they will comprise 16% of employment opportunities and 23.1% in London.
Jobs in the manufacturing sector are set to shrink by 1.3% by 2027 as employers embrace technology. Manufacturing currently comprises 14% of employment opportunities in Yorkshire and the Humberside, 15% in the North East and the North West, and 16% across the Midlands.
The report also warns that lower growth in employment opportunities could correlate with increases in economic inactivity in some regions.
EY UK chief economist Peter Arnold said: “The data appears to show higher economic inactivity in regions with lower employment growth and subsequent prosperity. While it’s unclear which direction the correlation goes and whether high inactivity leads to low growth or vice versa, encouraging people back into work could help to at least partially close the growth gap in selected regions.
“Addressing this will likely require policymakers to focus on a mix of incentives and programmes to increase participation, alongside health initiatives to address the significant number of people in the UK who have exited the workforce in recent years due to long-term sickness.
“The sectors that are expected to decline are often in the regions anticipating slower growth, so policymakers may want to consider targeted reskilling and retraining measures in these areas. This could support individuals in pursuing more prosperous opportunities, while helping these locations build up supply in those high-growth industries where demand for labour is set to be greatest.”
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