Reading set to lead UK’s post-pandemic economic recovery - EY report

Reading’s economy will outperform the rest of the UK in the coming years according to EY’s latest Regional Economic Forecast, which anticipates average annual growth of 2.7 per cent for the town between 2024-26.

This growth, coupled with an average 1.7 per cent annual increase in jobs which puts them second only to Manchester, is expected to spare Reading from the recession facing the UK in 2023.

The forecast mirrors trends across the South East, whose economy is set to grow 2.2 per cent between 2024-26, and jobs by 1.4 per cent. The region’s success can be put down to its mix of businesses, as growth will be driven by the Information and Communication, Professional Services, and Science and Technology sectors.

Gareth Anderson, Managing Partner at EY in the South East, said: “The diverse nature of the South East’s sectors – and strong representation in each of plc, private and overseas parented companies – means the region is well-set for future growth as we recover from the economic impact of the pandemic. With an advantage in high value-added sectors like tech and professional services, it’s not a surprise to see Reading leading the table for expected growth.

“A diverse economy with high-skilled jobs are among the factors that continue to make the South East a desirable place to live and work, allowing us to attract and retain quality talent, further promoting regional growth.

“However, there will be areas which feel the effects of the rising cost of living, which is likely to have the biggest impact in places that are dependent on their local High Streets or public sector jobs.”

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Statistics from individual sectors confirm such fears over ongoing cost of living pressures, as this year’s worst performing sectors are expected to include wholesale and retail (-3.3 per cent), accommodation and food services (-2.7 per cent), and arts, entertainment and recreation (-1.8 per cent). Manufacturing (-2.9 per cent) has been impacted not only by falling consumer demand, but higher costs for raw materials, labour, and borrowing.

EY’s forecast also points to the widening gap between London and the rest of the country. In contrast to the predicted 0.2 per cent contraction for the capital in 2023, the economies of regions such as Yorkshire and the Humber and the East Midlands are set to shrink 1.0 per cent each. London and the South East are then expected to outpace the UK’s average economic growth of 2.1 per cent between 2024-26, with Reading leading the way.

Rohan Malik, UK and Ireland Managing Partner at EY, said: “The rising cost of living is likely to exacerbate the differences in regional economic performance, widening regional inequalities and heightening the need for economic policy which spreads growth out across the UK. Levelling-up presents an opportunity to boost growth for the whole of the UK – but familiar patterns are still all too present as the economy recovers from the pandemic.

“London clearly enjoys advantages in economic resilience, skill levels, and in productivity – both in higher and lower skilled sectors. But London’s performance also offers lessons for the rest of the country. Sector composition is key for regional economic performance.”

“The key to nurturing a strong sector composition is investment in high value-added sectors, like advanced manufacturing and information and communication. The transition to Net Zero, for example, represents a generational opportunity to rebuild the manufacturing base, upskilling workers in new energy generation and operation capabilities across the value chain from construction of solar farms, heat networks and hydrogen pipelines to electric vehicles and charging infrastructure.”

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