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North East and London economic gap to widen by £57bn in next decade, report predicts

New findings from law firm Irwin Mitchell has predicted that the economic gap between the North East and London will widen by £57.2bn in the next decade.

The UK Powerhouse report, produced with the Centre for Economic and Business Research (Cebr), provides an estimate of GVA and job creation within 38 of the UK’s largest cities 12 months ahead of the Government’s official figures.

In the most recent version of the report, the economy in Newcastle recorded year-on-year rise in output in growth of 2.2% in Q2 2016. In the previous quarter, annual growth in Newcastle stood at 1.8%.

Sunderland’s economy grew by 2.3% in the 12 months to Q2 2016 compared to 1.7% in Q1 and Middlesbrough’s economy expanded by 1.7% in Q2 compared to 1.1% in Q1.

In what is a blow to the Government’s economic rebalancing plans, the report predicts that the city economies in the North East will continue to be outpaced by others in the South East.

By 2026, it predicts London’s economy will expand by 16.3% and that fast growth cities in the South such as Milton Keynes and Cambridge will grow by 22%.

Meanwhile, the report predicts that the economy of Newcastle, Sunderland and Middlesbrough will see growth by the end of the next decade of 12.9%, 11.9% and 8.2% respectively.

The study predicts that the gap between London and the North East region will grow by £57.2bn between now and the second quarter of 2026.

Niall Baker, CEO at Irwin Mitchell’s Business Legal Services division, said: “There has been a significant amount of political uncertainty over the last couple of months so it is pleasing to see that there has been a recovery of growth rates in the North East region.

“What is perhaps more significant however is the lack of progress is tackling the divide between London and the North. The Northern Powerhouse initiative has now had the backing of Theresa May and other senior MPs and it’s vital the Government refocuses its efforts in this area and ensures economic prosperity is shared fairly.”

Irwin Mitchell produced its first UK Powerhouse report in October 2015. The report predicted a growing economic gap between the South East and the north of England and made nine policy recommendations along with a call for the government to radically rethink how it looks to rebalance the UK’s economy.

What do you think? Do you trust the new government to shorten the gap? Share your thoughts below.

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