Brighton and Reading set to be among fastest-growing urban centre economies by end of 2023

By Simon Toft

6 January 2023

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Brighton

Brighton is expected to end this year with one of the fastest-growing city economies in the UK, according to a new study.

Meanwhile Reading is also predicted to bounce back in 2023 and see some of the country's best growth in GVA - the value of goods and services produced in an area, industry or sector of an economy, and employment.

The Irwin Mitchell City Tracker has been produced by the Centre for Economics and Business Research (CEBR) and examines 50 locations across the UK, forecasting future growth.

The report from the law firm says the UK economy is estimated to have entered a recession, driven by the cost-of-living crisis which is expected to continue into 2023.

However, economic growth is forecasted to resume in the second half of 2023, with most cities expected to see an annual expansion in GVA by Q4 2023.

Brighton is expected to end 2023 as the fourth fastest-growing city, with 1.1% annual GVA growth.

This will follow several weak quarters of growth and an annual contraction in output in Q2 2023, as cost-of-living pressures lead to weak demand.

Brighton has a large retail sector, which is likely to struggle as many consumers cut back spending amidst rising bills and mortgage costs.

However, the city also has a thriving knowledge-intensive business services sector, which is set to be less affected by the recession.

In Q4 2022, the fastest-growing city economy is estimated to be Reading. It had 1.9% annual GVA growth, but employment growth was relatively weaker at 0.3% annual growth.

This suggests that productivity improvements are behind its strong performance.

The opening of the Elizabeth line saw Reading benefit from improved connectivity to London.

Its strong links to the capital and cheaper office rents make it an attractive city for businesses, such as Microsoft, Oracle and Cisco Systems, who have all located there.

Meanwhile, the Thames Valley Science Park is also home to many companies, including start-ups.

Reading won’t be completely resilient to the upcoming recession, with an annual contraction in output expected in Q2 2023.

However, the city is expected to rebound and see growth of 1.1% by Q4 2023, ending the year in second place on the city tracker tables for GVA.

Hannah Clipston, Director of Strategic Growth (Corporates and Institutions) at Irwin Mitchell, said: "Despite the optimism at the start of 2022 caused by the lifting of COVID restrictions, the year presented new challenges.

"Inflation, supply chain issues and disruption caused by the strikes made the economic landscape difficult to navigate for many businesses.

"Our latest report estimates the UK is in a recession, with the cost-of-living crisis and consumer spending squeeze being felt.

"Unlike some other forecasters, we expect the UK’s economy will be growing again by the second half of the year.

"As this happens, recovery and growth won’t dissipate evenly across the UK. We predict big differences in where these increases in output and employment will occur."

Charlotte Rees-John, partner and head of Irwin Mitchell’s consumer sector, said: "The consumer sector holds the key for unlocking growth in the UK economy, but 2023 looks set to be another very tough year.

"2022 presented numerous challenges to retail, hospitality, and leisure. Falling consumer demand, particularly in relation to discretionary items, caused by inflation and general unease about the economy, has heavily dampened the optimism that we had for the sector at the start of the year.

"Although there were positive signs in November in relation to people returning to shops and restaurants, the train strikes have in some cases been a hammer blow to businesses that were hoping for a bumper December.

"It doesn’t look as if 2023 is going to be a stellar year for the sector. Indeed there are predictions that things could be worse and businesses will need to be even more agile than they were in the previous 12 months.

"However, the consumer sector has been one of the most resilient and innovative in recent times. Those businesses that succeed during 2023 will be in a very strong position to take advantage of a more stable economic environment in 2024."