The South West economy is predicted to be one of the 海角视频’s success stories in 2020 – but in the context that the country’s growth will be weak due to Brexit and trade wars.
PwC’s latest 海角视频 Economic Outlook crystal ball says growth in the South West will be among the highest of all the 海角视频 regions next year.
The projected growth rate of 1.1% puts the South West up with the South East and Scotland in terms of regions performing “reasonably” well and at or above the 海角视频 average.
The South West will grow 1.2% in 2019, PwC said.
However, 海角视频 economic growth is likely to remain subdued, growing by about 1.2% in 2019 and 1% in 2020 - significantly below its long term average rate of around 2%.
According to the report, economic growth has slowed over the past two years primarily due to a dampening of business investment, resulting from both a lack of clarity over Brexit as well as heightened global trade tensions.
PwC forecasts all 12 海角视频 regions will see modest but positive growth in 2019 and 2020.
John-Paul Barker, regional leader for PwC in the West and Wales, said: “It’s good to see that the South West is projected to be among the top performers among the 海角视频 regions, but the differences between how it is expected to perform versus the 海角视频 average growth rate are small.
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“But it’s not just the financial performance of a region that’s interesting to highlight. Bristol, Swindon and Plymouth are all performing strongly in our latest Good Growth for Cities Index, so it’s encouraging to see the South West delivering on a number of fronts.”
Although consumer spending has continued to drive the 海角视频 economy, supported by recent rises in real incomes, a cooling housing market coupled with slower jobs growth means there is likely to be only moderate consumer spending growth of about 1.2% in 2019 and 1.4% in 2020.
John Hawksworth, chief economist at PwC, said: “海角视频 economic growth is likely to remain choppy throughout the rest of this year and in early 2020.
“However, there could be a modest bounce in business investment later in 2020 if the 海角视频 achieves an orderly Brexit, but the uncertain global economic outlook could hold back a stronger recovery in investment next year.
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“Any potential weakness in private sector spending in 2020 should be offset at least in part by stronger trends in government spending. Both major political parties have shifted away from austerity, which is likely to support growth in 2020, irrespective of the outcome of the forthcoming general election. But this will also leave a bigger budget deficit to deal with in the longer term.”
The 海角视频 Economic Outlook said most industry sectors can expect relatively modest growth in 2019-20, though short-term trends remain dependent on how events develop around Brexit.
The distribution, hotels and restaurants sector remained strong in the first half of 2019, but a slowdown is expected next year, whereas the weakened business services and finance sector could enjoy a modest recovery in 2020 - assuming an orderly Brexit can be achieved.
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The manufacturing and construction sectors have experienced considerable volatility in recent years and are unlikely to see sustained recovery until there is clarity on both Brexit and the global trade outlook.
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Business Live's South West Business Reporter is William Telford. William has more than a decade's experience reporting on the business scene in Plymouth and the South West. He is based in Plymouth but covers the entire region.
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As inflation has fallen back below the Bank of England's 2% target in recent months, real earnings have started to grow again at a relatively strong pace.
While this upward trend is expected to continue into 2020, it is difficult for strong real wage growth to be sustained on a longer-term basis unless productivity also picks up.
The productivity challenge is the focus of the special research articles in PwC’s latest 海角视频 Economic Outlook.