The Brexit vote will halve expectations of economic growth for the UK’s largest cities, according to the CEBR
Some of the UK's largest cities will see economic growth drop by as much as half next year, according to one think tank, although some will be set to recover by 2018.
A study of 38 cities by the Centre for Economics and Business Research found that while all would continue to grow, the expectations for the scale of the growth are now dramatically reduced following last month's Brexit vote.
In a joint analysis with law firm Irwin Mitchell, the CEBR cut its prediction for growth in GVA across London from 2.4 per cent to just 0.4 per cent for the year to the first quarter of next year.
The capital is expected to see growth recover to one per cent in the following year, down from 2.2 per cent in pre-referendum forecasts.
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Similarly, Birmingham and Manchester are expected to see economic growth fall to 0.5 per cent for the year to the first quarter of 2017, down from a forecast of 1.8 per cent before the June vote.
Although the cities are then expected to recover to one per cent growth the following year, this is down from previous predictions of 1.6 per cent and 1.7 per cent, respectively.
Comparison of GVA growth for 12 months to first quarter 2017 following EU referendum
Source: Office for National Statistics, CEBR analysis
Cities like Cambridge and Milton Keynes are expected to see the fastest recovery – although both have seen their predictions for the year to the first quarter of 2017 cut by one per cent, growth in next 12 month period is expected to rapidly return to two per cent levels.
“The economic environment still remains highly uncertain following the referendum results but it is clear that there is going to be a negative short-term impact on the British economy,” CEBR economist Sam Alderson said.
“There are however a range factors helping to offset the decline including the likelihood of further monetary easing from the Bank of England, the improvements in household finances seen through 2015 and the competitive boost provided by the weaker pound.”
Niall Baker, chief executive of Irwin Mitchell’s Business Legal Services team, added: “These results show that recovery rates of the cities differ considerably and despite many commentators suggesting the government’s Northern Powerhouse initiative will be put on the back burner, this forecast actually demonstrates that the need for economic rebalancing is stronger than ever.”