The South East economy shrinks by 1.9% following lockdown and pre-pandemic data shows an earlier Brexit contraction

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A quarterly nowcast for the SE for the 3 months ended March 2020 which captures the start of lockdown, published by the Economic Statistic Centre of Excellence (‘ESCoE’), has estimated that the SE economy contracted by 1.9%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the SE eighth and suggests the regional economy has so far coped averagely with the pandemic relative to the other eleven ‘regions’ of the UK. Over the same period the East Midlands was ‘best’ with a fall of 1% with Northern Ireland’s 3.9% contraction the ‘worst’; the UK decline was 2%.

For the 12 months ended March 2020 on a rolling 4 quarter basis, ESCoE has estimated that SE growth has dropped from 1.8% to 1%.

This ranked the SE fifth (previous ranking fourth) and suggests the region has largely held its position relative to the other eleven parts of the UK. Over the same period UK growth was 0.5%; growth in London (ranked first) was 1.8%; and growth in the East Midlands (ranked twelfth) was -0.6%.

ONS GDP to September 2019

Official ONS figures for an earlier period which reflects Brexit uncertainty rather than Covid 19 turmoil, show the region dropping a few places relative to other parts of the UK. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its fourth estimate for the SE, the other eight English regions, and Wales.  GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before ESCoE’s estimates shown above and compare GDP in the quarter ended September 2019 with the same quarter a year earlier. These showed the SE grew by 0.8%, a deterioration on 2.1% the previous quarter. This placed the SE fifth (previous ranking second) out of the twelve UK ‘regions’.

London topped the table with growth of 5% whilst UK growth over the same period was 1.2%. The West Midlands was the worst performer and contracted by 1.5%. The East of England and the North West were the other two ‘regions’ in the UK to suffer a decline.

In the same report, the ONS’s figures also highlighted that the standalone quarter to September 2019 showed an improving picture in the SE with the data better than the previous quarter. The SE economy fell by 0.2% in July to September 2019, following -0.7% in April to June 2019.

This placed the SE ninth (previous ranking also ninth) out of the twelve UK ‘regions. The SE was one of four regions of the UK that saw their economies contract but overall the UK grew by 0.5%.

Again London was top with quarterly growth of 1.4% whilst the North West and Northern Ireland contracted by 0.2%, with the East Midlands posting a drop of 0.3%.

In this period, the SE’s best sector was mining with growth of 4.4% but accommodation/food services fell by 2.4%. Overall production grew by 0.3% but construction fell by 1.5%, services by 0.2% and agriculture by 0.1%.

Labour

More largely pre-pandemic data from the ONS showed unemployment in the region was 9,000 lower at 142,000 between January and March; the drop of 0.2% took the rate to 2.9%. At 5.4% the North East was the highest; Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.9%.

The South East had the highest employment rate at 80.2% where 4.7m are employed; this compared with 72.4% in Northern Ireland, with the UK rate at 76.6%.

Housing

The SE’s average property price increased by 0.6% over the month to £323,353. The uplift took the annual increase to 1.6%. In comparison, UK prices dropped by 0.2% to £231,855 during March, an annual growth rate of 2.1%.

The ONS data is based on completed housing transactions. Typically, a house purchase can take 6 to 8 weeks to reach completion so the price data in the March figures will therefore reflect those completions that occurred before lockdown.

Given the closure of the housing market following lockdown the ONS has suspended its index until further notice.

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