Growth in the South East was 1.4% in the year to June 2019, which ranked the region seventh (out of twelve UK ‘regions’) according to estimates from ESCoE. The drop from the previous quarter’s growth of 1.5% suggests the region’s economy is contracting. At 2.3%, London had the best performance with Northern Ireland at 1% the worst. The national growth rate for the same period was 1.5%. With the UK economy contracting by 0.2% in the quarter, falling growth in the South East reflects this and is similar to other regional economies which have also shrunk.
Unemployment in the South East decreased by 12,000 to 139,000 between April and June, a drop of 0.3% to 2.9%, the joint second lowest rate in the UK. The South West had the lowest unemployment rate at 2.7%, the North East had the highest at 5.3%, with the UK rate at 3.9%. The South West also had the highest employment rate at 80.5%, which compared with the South East at 79.6% and the UK rate of 76.1%, which is the joint highest since comparative records began in 1971.
In June, South East average earnings increased from £691 to £718 per week. London had the highest average earnings of £831; the North East had the lowest at £537. In the UK average earnings grew by 3.7% or by 1.8% after inflation.
The South East’s average property price increased during the month, the 1.1% rise to £291,370 reduced the annual price drop to 0.6%. In comparison, UK prices grew by 0.7% to £230,292 during June which left the annual growth rate unchanged at 0.9%.
On infrastructure, regional transport body, England’s Economic Heartland, has recommended that the Government invests in 11 road schemes from Swindon to Cambridge at a cost of more than £700m. The recommendations form part of the Oxford to Cambridge arc strategy – as outlined by the National Infrastructure Commission – which also includes the re-opening of the previously closed Oxford to Cambridge railway and building 1m new homes. Cost estimates of an Oxford-Cambridge expressway alone range between £3bn and £7bn.
On development, a £450m waterfront project has been ended by Southampton City Council after five years. The proposed Royal Pier Waterfront scheme would include a hotel and a casino on land reclaimed from the River Test in Southampton. The council gave no reason for the termination. A food market and 730 flats are also included, to be built on the site of the derelict Royal Pier and the reclaimed land. In Hove, Crest Nicholson has withdrawn from the 1.8 hectare King Alfred development. The project involved replacing the King Alfred Leisure Centre with modern sports facilities, and building new housing, including affordable homes. A total of £23m of public money – £15m from the Housing Infrastructure Fund and £8m from Brighton and Hove City Council – was approved to assist the developer in building a new sports centre and 565 homes.
On transport, the competition to operate the South Eastern franchise has been cancelled. The current incumbent, Southeastern, has been given a five-month extension to run the route between London, Kent and parts of East Sussex until April 2020. Go-Ahead runs Southeastern with Koelis through their joint venture Govia. A Department for Transport spokesperson said the decision to cancel the competition followed concerns that continuing the process would lead to additional costs to the taxpayer. The franchise was put out to tender in November 2017, and again last year before being cancelled by new Transport Secretary, Grant Shapps. FirstGroup and Italian firm Trenitalia were awarded the West Coast Mainline franchise this month.
A report by an All-Party Parliamentary Group (‘APPG’) of MPs which looks at post-Brexit Funding for the nations and regions has found that the UK would receive additional EU funding in the 2021-27 spending round. Three additional sub-regions, none of which are in the SE, are likely to slip below the threshold of 75% EU average GDP per head that would qualify them for ‘less developed region’ status. Additionally, the EU has proposed that ‘transition region’ status should be extended to cover all regions with a GDP per head between 75 and 100 per cent of the EU average, compared to 75-90 per cent at present. Seven additional sub-regions are likely to slip below the threshold of 100% EU average GDP per head qualifying them for ‘transition region’ status. Again, none of these sub-regions are in the South East.
The UK government has promised to replace EU funding to the regions with a new UK Shared Prosperity Fund. If the new sub regions are added, the APPG calculates this amounts to c£1.8bn pa, on top of the c£2.2bn pa already committed as part of Local Growth Fund. Integrating the Local Growth Fund into the UK Shared Prosperity Fund could be problematic. The Local Growth Fund allocates funding to LEPs via competitive bidding whereas the allocation of EU funds uses a fixed formula. How the Shared Prosperity Fund will be allocated and mesh with other pots like the City Deals is yet to be determined.