Regional UK economies in recession in 2023
We expect the UK economy to be in recession in 2023, with GDP forecast to contract by 0.7% in the year as a whole. The downturn will be led by falls in real household income and consumer spending, and a difficult year for manufacturing. Regions most exposed to these headwinds will face the greatest challenges, and some will see their level of economic activity drop to below pre-pandemic levels in 2023.
What you will learn:
- Northern Ireland is forecast to be the weakest performing part of the UK this year, owing to its relatively high exposure to the weakest performing sectors. The northern regions, the midlands, and Wales are also expected to see relatively large falls in GVA. By contrast, economic activity in the southern regions is expected to a decline broadly in line with the UK average.
- London is the exception. Here the fall in activity is likely to be relatively modest, mainly because the capital’s economy is dominated by the digital and business services sectors, which are expected to be among the most resilient parts of the economy in 2023. And London, alongside other regions, will also benefit from growth in public services.
- Nevertheless, we expect employment in London to fall in 2023, mirroring that for other regions. Job losses are expected in most sectors, but will be most significant in retail, hospitality, and leisure, stalling the recovery that these industries have achieved since they were released from pandemic-induced restrictions. Lower employment will lead to a rise in unemployment in all regions, although the increase should be relatively modest.
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