As a business professional, it's important to understand how the current economic landscape is progressing and where it is heading. Staying informed about the sectors experiencing the most growth, and where job opportunities are increasing, is crucial for informed decision-making and strategic planning.
Performance towards the end of 2023
The UK economy surpassed expectations with a 0.3% month-on-month GDP growth in November, providing relief from the 0.3% contraction in October. This indicates a potential avoidance of a "technical recession" in 2024. The primary contributors to this positive trend were the services sector, notably boosted by Black Friday retail sales, and a high performance in the ICT sector. Despite these positive indicators, the broader perspective reveals a scenario of stagnation.
The Office for National Statistics (ONS) revised the quarter-on-quarter growth estimates downward to -0.1% for Q3 (previously 0.0%) and 0.0% in Q2 (down from 0.2%). Nevertheless, a decline in inflation at a faster rate than wage growth, coupled with diminishing expectations for interest rates, imparts an optimistic tone. The sustainability of this optimism hinges on various factors, with the impact of elevated interest rates being a crucial determinant.
As 2023 came to a close, the KPMG and REC UK Jobs survey revealed a decline in hiring for both temporary and permanent positions in December. Businesses are still making redundancies due to a lacklustre economic outlook, contributing to an increased availability of staff. While strong wage growth remains a key factor of upside risk to inflation, the overall data currently supports the argument for implementing rate cuts.
Business confidence in the UK's regional economies can be categorised into three levels. The first group consists of regions like the North-East, Wales, and the North-West, which, despite recent improvements, still report a decline in economic activity. The second group includes regions in positive territory, such as much of the Midlands, East, and South-East of England. However, these areas face challenges from interest rates and high-cost pressures. The third group stands out, with London scoring significantly higher (PMI of 58.2), indicating a robust and booming economy, contrasting with other regions struggling to achieve growth over the past three months.
2024 - 26 presents new business opportunities in the North-West
Despite a decline in recent economic activity, the North-West is expected to have the fastest-growing economy in the North of England between 2024 and 2026, with administrative and support services and information and communication sectors playing a factor in driving the region’s economy forward.
Manchester is set to see the third-fastest economic growth of all UK towns and cities between 2024 and 2026. When measured by Gross Value Added (GVA), Manchester’s economy is expected to see annual average growth of 2.5% between 2024 and 2026.
Manchester’s positive outlook is supported by the strength of the city’s professional, scientific & technical, and financial & insurance activities sectors.
As a whole, the North-West region is expected to see an annual average growth rate of 2% over the same period. This represents a significant bounce back from the previous forecasted contraction of 0.7% for 2023.
The report also shows that Manchester is expected to record the fastest rate of employment growth of any UK town or city from 2024 to 2026, with job numbers in the city forecast to grow 1.8% per year over the period. This is above the national average as UK jobs are expected to grow by around 1.3% a year, and North-West jobs are expected to be up 1.2% each year.
In conclusion, as we step into the future of 2024, the economic landscape in the UK is marked by both challenges and opportunities The recent performance indicators, while mixed, have shown resilience in the face of uncertainties. As businesses and professionals plan for the years ahead, the North-West region, with Manchester at its core, stands out as a region of opportunity.