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State of the Region 2023 - Falling Behind and Not Catching Up
State of the Region 2023 - Falling Behind and Not Catching Up
This report highlights the considerable challenges which the regional economy is facing. The East is still dealing with the aftershock of macro events including the Covid-19 pandemic and the war in Ukraine while adjusting to the post-Brexit settlement and new trade agreements.
The region remains one of the largest and most productive economies in the UK but there are worrying signs that the East of England has slipped relative to other regions and nations – with negative wage growth, falling vacancies, fewer new enterprises and rising business closures, decreasing levels of Foreign Direct Investment, as well as an increasing trade deficit.
There are, however, huge opportunities to be realised across the East that can help drive productive growth in the UK. The region has significant advantages in knowledge-based industries and world class research institutions. Growing and scaling businesses in these high value sectors is vital to the regional and national economy. Widening access and opportunity to these industries is also vital to levelling up and ensuring that all parts of the region benefit from good growth.
Published:
November 2023
Key findings:
1. GVA per hour worked is widely used as an indicator for productivity. Both the East and the UK have maintained low levels of growth but the gap between the East and UK average has gradually widened in recent years, from £2.03 in 2017 to £2.43 in 2021.
2. The East shows a slightly lower level of employment growth (-0.6%) since 2019 compared to the UK average growth.
3. Unemployment has started to rise while the number of job vacancies have decreased since 2019. The East of England has a similar trend to the UK over the last four years but a more significant decline in vacancies.
4. Since 2019 there has been a sharp increase in the proportion of vacancies relating to skill shortages as well as skill gaps among the existing workforce, while levels of investment in work-based training have remained flat as participation rates in training have fallen.
5. There has been a decrease (7.4%) in the number of FDI projects and a fall in FDI jobs (23.6%), while the UK increased by 4.1% and decreased by 6.1% respectively.
6. Full-time annual earnings in the East have increased substantially from £653 to £789 per week, but compared to the change in earnings in the UK over the last four years the East has regressed during this period (-1.2%).
7. The annual values of both exports and imports experienced a significant decline in 2020. While this has swiftly rebounded with more substantial growth in non-EU trades compared to trade within the EU, a widening trade in goods deficit has emerged (£15.81 bn, an increase from the trade deficit of £14.03 bn in the year ending Q1 2022).
8. The East, like the UK, has experienced a decline in new business establishments (a decrease of 13.9%) paralleled by an upward trend in business closures (an increase of 8.5%) since 2019.