The economy in the East Midlands is predicted to grow by 0.9% this year, up from 0.4% in 2023 according to the latest PwC UK Economic Outlook.
Despite this year-on-year improvement, the East Midlands still lags behind the predicted GDP growth for the UK overall, which sits at 1.0%.
However, the East Midlands is still outperforming the West Midlands (0.7%), North East and South East (0.8%) and is on par with Yorkshire, Scotland and the South West (0.9%). The capital and Northern Ireland are both predicted to see the biggest growth at 1.2%, followed by the North West and Wales (1.1%) and the East of England (1.0%).
With many different sectors driving growth across our nations and regions, PwC’s recent Framework for Growth report demonstrates how crucial localised strategies are. Business leaders interviewed for the report said that the changes most critical to their business – the skills system, planning system, infrastructure investment and overall support made available to smaller businesses – were best driven at a local level.
Alex Hudson, Market Senior Partner for PwC East Midlands, said: “Despite the data showing that economic growth in the East Midlands is lower than the UK picture, with the new government and recently created East Midlands Combined Authority, now is the time for businesses and local government to work together to develop a localised plan for growth.
“PwC’s recently launched Framework for Growth report highlighted the need for businesses and government to collaborate more closely to deliver sustainable growth and outcomes for the future. 68% of UK businesses have identified skills, education and talent as their top priority for growth.
“We have some world-class educational institutions and some of the UK’s biggest companies here. I believe that by investing in skills for younger generations and ensuring our current workforce is equipped with skills for the future, we will move the dial on the East Midlands economy, and the time to act is now.”
UK overview:
- UK GDP to grow by around 1% this year, up from the 0.5% estimate late last year. In its main scenario, PwC expects growth to pick up further to 1.7% in 2025 and 1.8% in 2026.
- It is expected that headline consumer price inflation will bounce around the Bank of England’s 2% target for the remainder of 2024, due in part to stubborn services inflation.
- Corporate insolvencies are expected to rise again this year despite already reaching a three decade high in 2023.
- Around one half of sectors are now experiencing growth and the other half contracting. The three sectors with a large proportion of public sector activity grew strongly; health & social work (2.7%), public admin & defence (2.2%), and education (1.2%).
- Consumer-facing sectors, such as retail and hotels, continue to struggle as consumers remain cautious. In PwC’s latest Consumer Sentiment Survey, 7 in 10 people said they still expect to make some spending cutbacks over the next three months
Barret Kupelian, Chief Economist at PwC UK, says: “The new Government has inherited an economy that was starting to show signs of growing faster as global tailwinds develop with more stable and predictable energy prices and lower inflation, and the impact of tighter monetary policy on economic activity starting to fade away.
“In our main scenario, we expect some of this momentum will continue in the short term as the policymaking environment becomes more certain and duller, especially when compared to other peer economies.”
Jake Finney, economist at PwC, says: “The UK has gone from being a poor-performing outlier on inflation to being one of the few advanced economies where inflation is currently back on target.
“However, the disinflation process is not complete. Indeed, our main scenario projection is that inflation will continue to hover in and around the Bank of England’s target throughout the rest of the year.
“There isn’t much scope for goods inflation to fall further, so the key ‘known unknown’ is when services inflation will return to more normal levels. Annual services inflation currently sits at around 5.7%, down from its peak of 7.3%.
“This is higher than what the Bank of England expected in May 2024 (5.3%) and way in excess of its level the last time inflation was at target in July 2021 (1.6%).”
