The economic gap between the north and the south of England could be wider by 2020 than it was in 2010 according to Ernst & Young forecasts.

Overall, the report has found that very little progress has been made over the past three years to tackle the problems of the north-south divide, and gross value added (GVA) shares have actually revealed the situation has worsened.

London and the south-east of England will see annual GVA growth averaging 2.2% and 2% respectively over the next three years, the EY report has found, compared to a 1.8% UK average. The four fastest growing regions over the period between 2010 and 2020 will be in London, the south-east, the south-west and the east.

Meanwhile, Stoke-on-Trent, Hull, Liverpool and Leeds are forecast to experience below average GVA growth of 1.2%, 1.4%, 1.5% and 1.7% and employment growth of -0.1%, 0.1%, 0.3% and 0.9% per year on average respectively.

The making of Manchester

Manchester bucked the trend for the north, though, as it expects annual rises for GVA and employment growth to be 2.4% and 1.7% respectively until 2020 – higher than in the capital city. The economy is expected to be driven by solid performance in sectors such as professional, scientific and technical, administrative and support sectors, and construction.

Debbie O’Hanlon, national markets leader at EY in the UK, said: “The strong GVA performance both historic and projected for Manchester demonstrates that location is not a binding constraint on growth. It is a reflection of the substantial investments that have been made in the city over the last decade.

“However, the success of Manchester and the strong southern cities highlights the fact that city growth typically outpaces regional growth. In every region, the fastest growing cities outpace average regional growth and the smaller towns and cities are growing more slowly.”

Upping the north

The Northern Powerhouse Partnership, chaired by George Osborne, was set up to give northern cities and people more power away from London and improve the economies outside of the capital.

The body was intended to enable local businesses and politicians to commission research, share ideas and lobby Whitehall in order to obtain more devolution, but it seems the initiative has a lot of work to do.

EY’s chief economist Mark Gregory said: “The UK has made little progress on regional rebalancing over the past three years, and we expect more of the same over the next three years.

“We have had quite a lot of attention to devolving economic power but skills are still being run pretty centrally, so I think one thing would be giving some real resources and more local control to skills [policy] – for a lot of people labour markets are pretty local.”

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