After a period of generally disappointing growth in 2011 and 2012, the UK and regional economy has shown clear signs of recovery in 2013.
And according to PwC’s latest UK Economic Outlook report, GDP in Yorkshire & Humberside is expected to pick up from around 1.3% this year to 2.3% in 2014.
Non-financial services sectors will remain the main engine of growth in both output and employment, as has been the case for the last four years. The report shows these services sectors are playing an increasingly important role in driving UK export growth.
House prices in the region have also risen this year by 1.1%, which is lower than the national average of 2.9%, but is in line with the rest of the UK regions outside of London.
Nationally the report projects UK GDP growth to pick up gradually to around 1.4% in 2013, rising to around 2.4% in 2014.
Meanwhile inflation has remained stubbornly above target at an average of around 2.7% in 2013 which is expected to subside only slightly to 2.4% in 2014.
However there still could be upside risks to this inflation outlook if stronger global growth in 2014 pushes up commodity prices again.
Arif Ahmad, PwC’s Leeds senior partner, said: â¨â¨“After a couple of sluggish years in 2011 and 2012, the Yorkshire economy is showing clear signs of recovery this year and is now gathering real momentum, with predicted growth in line with the UK average.
“The services sector has been leading the growth but latest data sources indicate that manufacturing and construction are also now starting to recover.
“Given persistent above target inflation, we do not expect any significant further easing of monetary policy and attention could eventually turn to higher interest rates, although possibly not until late 2015, which is when we project the unemployment rate to fall to below 7% in our main scenario.“
The report also notes that spending on housing and utility bills has seen a strong increase and now account for around a quarter of total household spending, up from just 20% before the financial crisis. And this could rise to around 30% by 2030 as a result of rising utility prices and the housing market picking up.
In the longer term, the PwC report projects average real consumer spending growth of around 2% per annum to 2030, significantly lower than the average growth rate of 2.7% in the 20 years to 2012.
Ahmad added: â¨â¨“The report shows that there have been some noticeable changes in the pattern of consumer spending, which is projected to grow by around 2% in 2013 and around 2.3% in 2014. And we do not expect positive real earnings growth to resume until 2015 and even then only at a modest pace.
“Total household incomes will be supported by continued employment growth, particular in Yorkshire where total employment has risen by 4.9% over the last three years. But upward pressure on energy and food prices could act as a restraint on growth, as could an eventual rise in interest rates later this decade.
“Consumers are likely to remain highly price-conscious as online retailers and high street discount stores continue to take an increasing share of the market even after the economy recovers.“