City economy set to be ‘fastest growing’ in Midlands
Birmingham is set to have one of the fastest growing economies when the UK emerges from its recession in the second half of 2023, according to a new study by law firm Irwin Mitchell.
The Irwin Mitchell City Tracker has been produced by the Centre for Economics and Business Research (Cebr) and examined 50 locations across the UK, forecasting future growth in terms of GVA (gross value added) and employment.
The report, which estimates that the UK entered into a recession in the second half of 2022, expects economic growth to resume in the second half of 2023.
According to the research, Birmingham’s economy is expected to see its GVA grow year-on-year by 1.1 per cent in the final quarter of 2023, rising to £29.6 billion.
In addition to having the fastest-growing economy anywhere in the Midlands, Birmingham also performed strongly in terms of employment with this study predicting that headcount will stand at 613,800 at the end of next year. This would equate to a year-on-year increase of 1.4 per cent.
Birmingham’s strong performance by the end of next year contrasts with other locations in the West Midlands. Coventry, for example is expected to see annual GVA growth of just 0.5 per cent, whilst Wolverhampton’s economy is expected to grow by 0.1 per cent.
The report suggests that Birmingham’s large retail and hospitality sector will be negatively impacted by the cost of living crisis in 2022 and 2023, however, other sectors in Birmingham such as creative and digital technologies are expected to drive growth.
Josie Dent, managing economist at Cebr, said: "2023 will be a difficult year for consumers and businesses across the Midlands, with the cost of living crisis expected to lead to falling economic activity. However, Cebr forecasts that economic growth will resume in the second half of 2023, with most cities expected to see an annual expansion in GVA by Q4 2023.”
Charlotte Rees-John, partner and head of Irwin Mitchell’s consumer sector, added: “Last year presented numerous challenges and the downward pressure on spending activity, which continues to be concentrated in the consumer sector, looks set to continue throughout the first half of 2023.
“The consumer sector has however been one of the most resilient, agile and innovative sectors in recent times and those businesses that succeed during 2023 will be in a very strong position to take advantage of a more stable economic environment in 2024.”
She added: “Considering longer-term aspirations, such as the transition to carbon net zero, is something all businesses, irrespective of the sector they are in and the pressures that they are facing, need to do. ESG is fast becoming a priority for the majority, particularly at a time when there is huge pressure and scrutiny from consumers and investors who are increasingly making their decisions based on ethical as well as financial factors.”
