The East of England’s Gross Value Added (GVA) is set to grow 2.8% per year to 2025 – in line with the national average
The East of England’s working age population is forecast to grow 1.6% by 2025 –the second fastest growth rate in the country
Norwich’s GVA is expected to expand by 3.1% per year between 2022 and 2025 – the fastest rate of growth in the East of England. Cambridge and Luton are forecast to see annual 2.9% GVA growth.
Net Zero and a focus on the quality of life are key to the UK’s levelling up ambitions, report says.
Measured by Gross Value Added (GVA), the region’s economy is expected to be 8.5% larger in 2025 than it was in 2019 – ahead of the UK average (8.3%). Between 2022 and 2025, the region’s forecast annual GVA growth of 2.8% will be in line with the national average.
The region’s above-average performance by 2025 is thanks to its economic resilience during the initial onset of the pandemic: the East of England’s GVA had recovered to 97.2% of its 2019 size by the end of 2021, ahead of the UK average of 97%.
The East of England is also one of only four UK regions expected see their working age population grow by 2025. The region’s forecast 1.6% growth is behind only London (4.7%) and ahead of the South East (1.1%) and the East Midlands (0.1%). Between 2022 and 2025, employment in the region is expected to rise on average 1.1% per year.
The latest Regional Economic Forecast sets out the scale of the task needed to level up the UK economy. While the research shows the pandemic has helped to narrow the UK’s regional economic divide, the gap between London and the rest of the country is set to grow again during the post-pandemic recovery. Only two regions – the East Midlands and South West – are forecast to gain economic ground on London by 2025, with the capital on course to pull away again in the years afterwards.
The report also forecasts that the economic gap between cities and towns will continue to widen, with England’s major cities expected to grow 2.9% per year by 2025, compared to forecast growth of 2.6% in towns.
Norwich is set to be the region’s fastest growing location with GVA expected to expand by 3.1% per year between 2022 and 2025. This expansion is set to be supported by GVA growth in the education and administrative & support service sectors. Cambridge and Luton are forecast to see 2.9% growth, with expansion in Cambridge supported by the professional, scientific & technical and education sectors.
After Norwich, Cambridge and Luton, the fastest growing regional locations are expected to be Peterborough (2.6%), Southend (2.6%) and Bedford (2.5%).
Stuart Wilkinson, Office Managing Partner at EY in the East of England, said: “The East of England, like many other parts of the UK, has seen some considerable economic challenges due to COVID-19. However, the latest Regional Economic Forecast reveals that the East of England has bounced back well and there are positive signs of a post-pandemic recovery.
“The region’s ability to attract highly skilled professionals across a broad range of sectors and retain those working in key industries – including life sciences, technology, and agri-tech – is crucial to maximising economic recovery and business growth. It also has the potential to act as a draw for global businesses as they look to open or expand operations in the UK. An increasing working age population is a positive sign of the East of England’s enduring attractiveness as a place to live, work and invest.
“Greater workplace flexibility and the switch by many businesses to hybrid working could help open up more opportunities. Focusing on what attracts people and businesses to a region and tackling issues that affect quality of life will be key to taking advantage of this.
“As previous EY research has shown, the UK’s Net Zero and levelling up ambitions go hand-in-hand: the billions of pounds of investment required to reach Net Zero present a golden opportunity to transform not only the environmental sustainability of the UK economy, but its regional balance too. The manufacturing and utilities sectors, for example, are key to the Net Zero agenda – and they are vital to regional economies.
According to EY’s analysis, the West Midlands, North West and London economies were the most affected by the initial impact of the pandemic, with 2021 seeing the West Midlands economy recover to just 94.5% of its 2019 size, the North West’s economy reaching 96.1% of its 2019 size, and London recovering to 96.4%. By contrast, the Yorkshire and the Humber economy had reached 98.8% of its pre-pandemic size by the end of 2021, while the North East was at 98.5%.
Relative to their pre-pandemic GVA levels, the West Midlands (up 5.3%), North West (6.8%), and North East (7.9%) are expected to grow at the slowest pace.
Sector mix key to long-term recovery
Across the UK, service and city centre activities are expected to be the fastest growing between 2022 and 2025, with accommodation and food service expected to improve its GVA by 8.6% per year, followed by other services (up 6.7%), administrative and support services (up 5.5%), and arts and entertainment (up 5.4%). The transportation and storage sector is expected to grow 3.8% per year. By contrast, manufacturing is one of the sectors expected to undershoot the overall annual UK GVA growth (2.8%), with 1.7% growth forecast.
The East of England’s fastest growing sector between 2022 and 2025 is forecast to be accommodation and food service (up 8.2%), while the fastest growing of the region’s five biggest sectors will be the construction sector (up 2.7%).
Stuart Wilkinson added: “These sector mixes will dictate the longer-term recovery of the East of England, helping the region to weather the pandemic. Conversely, city-friendly sectors like digital, science and technology, and services will eventually bounce back, which bodes well for the region’s innovation and tech-led businesses.”
Rohan Malik, EY’s UK&I Managing Partner Markets & Accounts concludes: “Long-term ambitions and sustained, coordinated action are needed to balance growth across the country while ensuring that ‘levelling up’ isn’t simply moving activity elsewhere at London’s expense. The right actions now will bear fruit eventually, but policymakers need to be in this for the long haul.”