A new economic report predicts that Derby’s economy will be the fastest growing in the East Midlands by the end of 2023 – but it warns that the levelling-up agenda will stall unless more Foreign Direct Investment (FDI) is attracted to the region.
According to Irwin Mitchell’s UK Powerhouse report, produced by the Centre for Economics and Business Research (Cebr), Derby’s economy is predicted to deliver year-on-year growth of 2% by the end of 2023 with GVA standing at £7.1 billion.
The economies of Nottingham and Leicester are both expected to generate 1.7% year-on-year growth by Q4 2023.
Despite this increase, economic growth in cities across the Midlands is expected to be exceeded by that of Southern counterparts. The study says the South and the East of England will by the end of next year be home to eight of the top 10 fastest growing cities. Significantly, out of the 50 locations included in the study, over half of the slowest growing economies are expected to be in the North of England.
Nottingham and Derby are closely matched in terms of jobs growth by the end of next year, with forecasted annual growth of 1.2% and 1.1%, respectively. This will see Derby adding 3,600 newly filled positions and Nottingham adding 5,500 new jobs. Leicester’s growth is lower at 0.7% with 3,400 more jobs.
UK Powerhouse also examines the latest trends in Foreign Direct Investment into the UK.
The report reveals the most recent statistics point to a general fall in the number of FDI projects into the UK with the East Midlands in 8th place.
The challenge will be for the East Midlands region to spearhead a drive for a greater share of FDI and to make inroads into the dominance of the South. The report suggests that success here is the key to levelling up northern cities as it allows them to benefit from the job creation and growth that such inward investment brings with it.
Bryan Bletso, partner and head of international at Irwin Mitchell, said: “This latest UK Powerhouse report makes clear that cities such as Derby, Nottingham and Leicester have huge potential, however the East Midlands’ position for FDI is cause for real concern. With a combination of business, local and central government backing, there’s no reason why it can’t attract its fair share of investment.
“The time to invest in their success is now and by doing so, the corresponding economic growth and job creation will go a long way towards safeguarding future prosperity and making levelling up a reality.”
Josie Dent, managing economist at Cebr and one of the report’s authors, said: “The economy is still expected to face some turbulence between now and the end of next year, notably through volatility in commodity prices, supply chain pressures, and the emerging cost-of-living crisis domestically. All of these factors are set to impact growth both at the aggregate level and, to a varying extent, within individual cities.
“This report highlights that much of the fastest growth during next year will be concentrated in the South. Locations such as Milton Keyes, Cambridge and Oxford have economies which are dominated by fast-growth sectors and they have also been hot spots for overseas’ investment. If economic levelling up is to be tackled effectively, these two issues must be recognised and quickly addressed.”
