Growth in Yorkshire & The Humber was 2.1% in the year to June 2019 according to estimates from ESCoE. The uplift from the previous quarter’s growth of 1.7% made Yorkshire & The Humber the second most improved region (out of twelve UK ‘regions’) and ranked it second overall. 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, growth in Yorkshire & The Humber compares favourably with most regional economies which have shrunk.
Unemployment in Yorkshire & The Humber increased by 7,000 to 136,000 between April and June, an increase of 0.3% to 5.0%; this was the second highest rate in the country. The South West had the lowest 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 73.3% in Yorkshire & The Humber. UK employment was estimated at 76.1%, the joint highest since comparative records began in 1971.
In June, average earnings in Yorkshire & The Humber increased from to £564 to £574 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.
Yorkshire & The Humber average property prices increased during the month, the 0.6% uplift to £161,997 took the annual growth rate to 0.9%. In comparison UK prices grew by 0.7% to £230,292 during June which left the annual growth rate unchanged at 0.9%.
It was a month of mixed messages from the Government on regional transport. In July, Boris Johnson used his first major policy speech in Manchester to promise a high speed rail link between Leeds and Manchester. High speed rail is expected to arrive in Leeds and the rest of northern England by 2033. But now the government has launched a review of the link (HS2) with a decision promised by the end of the year. With £7.4bn already spent, Transport Secretary, Grant Shapps, has refused to rule out scrapping it entirely. Phase 1 of the development between London and Birmingham is due to open at the end of 2026. In July, the current chairman of the project warned that the total cost could rise by £30bn to £86bn, putting the projects value for money into question. There was also disagreement over the project amongst northern leaders, with Manchester Mayor, Andy Burnham, pushing an underground option at Manchester Piccadilly (which may cost £6bn) contrary to HS2’s preferred surface station (£570m). With the HS2 project in jeopardy, Northern Powerhouse Rail’s £39bn High Speed 3 (HS3) or Crossrail for the North network in the North of England looks in doubt.
There may be less shale gas in the Bowland geological formation, which runs under Yorkshire, Lancashire, parts of the Midlands and into North Wales, than previously thought. The University of Nottingham and the British Geological Survey (BGS) have developed a new method for analysing the gas content of shale, which queries a 1,300 trillion feet of gas estimate in a 2013, suggesting instead that there may only be 200 trillion feet; 5-7 years’ of gas at the current rate of consumption instead of 50 years. Experts at the BGS were cautious in their interpretation of the study, however, even though several of their own scientists were involved in the paper. Cuadrilla, also rejected the new paper and other academics suggested the only way to provide accurate estimates of how much gas is likely to be produced is to drill, hydraulically fracture and test many wells. Ineos and Alpha Energy have shale gas exploration rights in Yorkshire.
On employment, the 3,000 British Steel jobs in Scunthorpe could be safeguarded after Atear Holdings, which owns nearly 50% of Erdemir, Turkey’s biggest steel producer, said it was in advanced talks with the Official Receiver. British Steel was put into compulsory liquidation in May. Atear Holdings is the investment vehicle of the Turkish military pension fund.
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 are likely to slip below the threshold of 75% EU average GDP per head that would qualify them for ‘less developed region’ status. Existing less developed regions like Cornwall and West Wales & the Valleys, will be joined by South Yorkshire and Lincolnshire, as well as the Tees Valley & Durham. These areas would likely have received at least €500 per head in EU regional development funding over 2021-27 which adds up to an extra £950m.
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. North Yorkshire would fall into this category, as well as East Anglia, East Wales, Greater Manchester, Leicestershire, Rutland & Northamptonshire, Outer London South and South Western Scotland. It is not clear how much extra funding these areas would have received from the EU, or but €50 per head over the next EU spending round would equate to £560m.
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.