North East’s growth ‘steady’ but ‘slower’

The North East economy is forecast to see “steady growth” over the next three years, with Newcastle expected to lead the charge, according to professional services firm EY’s latest Regional Economic Forecast.

Between 2025 and 2028, Newcastle’s annual Gross Value Added (GVA) growth is predicted to hit 1.5 per cent, surpassing the regional rate of 1.3 per cent and aligning closely with the national average of 1.6 per cent. 

The city is also poised for job growth, with employment set to increase by 0.8 per cent annually, outpacing the UK’s average of 0.7 per cent.

While the region’s overall growth is expected to be more subdued in the short term, with a forecasted 0.5 per cent GVA increase over the next year, a brighter outlook is predicted for 2026 and beyond. 

By 2028, Newcastle’s economy is projected to be over half a billion pounds larger than in 2024.

The report identifies energy, technology and professional services as key growth sectors for the region, while the electricity, gas and steam sector is set to see an annual GVA growth of 2.6 per cent, fuelled by investments in renewable energy. 

Meanwhile, Newcastle’s tech and professional services sectors are forecast to grow at impressive rates, with the information and communication sector expected to see 2.5 per cent GVA growth annually.

However, not all sectors or parts of the region are set to experience the same pace of expansion. 

Sunderland is expected to mirror Newcastle’s GVA growth at 1.5 per cent, but its employment growth is projected to be slower. 

After Newcastle and Sunderland, Hartlepool and Middlesbrough are expected to be the next top performers in the North East, with both towns forecast to see 1.3 per cent average annual GVA growth between 2025 and 2028, matching the regional average. 

Middlesbrough is set for slightly higher employment growth at 0.4 per cent, while Hartlepool’s is forecast to be 0.3 per cent. 

Stockton-on-Tees and Darlington are both predicted to see 1.2 per cent GVA growth, alongside 0.3 per cent employment growth annually. 

Durham is set to experience the region’s slowest growth, with GVA forecast to rise by just 1.1 per cent per year, while employment growth will remain at 0.3 per cent.

Michael Scoular, EY’s Newcastle office managing partner, said: “The North East’s return to steady economic growth in the coming years is an encouraging signal, particularly given the persistent challenges and headwinds that continue to face the region and the UK as a whole. 

“However, the North East is expected to be the UK’s slowest-growing regional economy over the next few years, highlighting room for improvement. 

“Navigating the challenges associated with the shift towards advanced manufacturing will be critical for the North East, and collaboration between the public and private sectors will undoubtedly be pivotal in supporting businesses through this transition.

“Going forward, creating an optimal environment for companies to thrive throughout the region, not just in Newcastle, across a wide variety of sectors, should be a top priority. 

“A significant focus should be placed upon how growth opportunities linked to evolving technology and the energy transition can be capitalised upon right across the North East in pursuit of unlocking more of the region’s untapped economic potential.”

You can download EY’s Regional Economic Forecast here.

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