No northern cities feature in a list of the 10 UK cities expected to see the fastest economic growth this year. Last year, by contrast, Manchester, Greater Manchester and Newcastle were in the top 10 fastest-growing cities identified in the UK Powerhouse report, which was produced by the Centre for Economic and Business Research (Cebr) for law firm Irwin Mitchell.
Of the Midlands cities, only Peterborough made the cut this year. Meanwhile, Cambridge and Oxford climbed a place each to take the number one and two spots respectively as Milton Keynes took third spot having been the fastest-growing city to Q3 in 2016.
The weaker outlook for cities in the north and Midlands can be blamed on the knock-on effects of the Brexit vote, says Cebr economist Jack Coy, citing the fact that they tend to rely more heavily on industries such as manufacturing and retail, which are likely to suffer more than sectors the south relies on such as communications and technology.
“Rising inflation under a sharply depreciating pound challenges profits for producers nationwide,” he says. “With consumer spending also sapped
by rising prices and a labour market that has probably passed its peak, growth may slow across the country. Retail hubs may also see spending growth soften while consumers rein in budgets.”
The report also highlights other factors that may threaten city growth in 2017, including the election of Donald Trump as US president. His pledge to repatriate US firms could be “deeply unsettling” for Welsh cities in particular, it says, because there are 275 US-owned companies in Wales employing around 48,000 people.
However, UK cities will continue to grow, albeit at a slower pace, says the report, predicting Cambridge will lead the way with gross-value-added growth of 1.4%, having grown by 2.9% last year.
“Challenges bring opportunities and, although the economic landscape will get tougher, we believe there is huge potential to help businesses unlock the potential the UK regions offer,” says Vicky Brackett, chief executive of Business Legal Services at Irwin Mitchell.
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