Both disposable income and productivity are set to boom in the UK between 2015 and 2020, according to research by Oxford Economics.
The report Beyond the City, launched today at the London Stock Exchange, predicts that productivity will increase by 10.7% in the next five years. This will in turn lead to disposable income rising by 12.4%.
This would be in sharp contrast to the past five years. Productivity only grew by 3.2% across that whole period and disposable income by 2.7%.
But the report doesn’t encourage the same level of optimism around job creation. Around 2.5 million jobs were created between 2010 and 2015 – but Oxford Economics predicts this level of job growth will reduce by 50% across the next five year period.
The study is based on analysis of certain sectors – including energy & environment, professional services and digital & creative sectors. It also looked at key metrics from regional economies and markets outside of London.
It is good news for Britain’s “second cities”. According to the figures Birmingham, Manchester and Liverpool are set to outperform global economic capitals Berlin, Paris and Tokyo in the near future (see below).
But despite this growth, the South-East will remain the best place for those looking for pay rises.
· 530,000 new ‘knowledge economy’ jobs are forecast be created over the next five years: 330,000 in professional services and 200,000 in digital & creative.
· Watford will see the biggest growth in jobs by 2020 – rising by almost 9% in total.
· Manufacturing productivity will rise by 15.5% in total over the next 5 years.
· Rising productivity will raise the UK’s international competitiveness, particularly in manufacturing which will see a 35% rise in the value of its exports.
· Wages will grow nationally but fastest in the South East, with Wokingham in Berkshire expected to see a 12.1% total rise by 2020, making it the best place to get a pay rise.
· Britain’s second cities – including Manchester (3.8%), Birmingham (2.5%), and Liverpool (2.6%) – will experience faster employment growth than Paris (1.7%), Berlin (1%) and Tokyo (-0.2%) over the next five years.
The study was commissioned to mark one year to go until the 2016 International Festival of Business.
CBI general-director John Cridland said the event will be “a fantastic opportunity for the United Kingdom to attract business, trade and investment from around the world”.
“A rise in productivity will be a key ingredient in the sustained success of the recovery, so it’s important business and the government work together to solve the problem through investing in skills and supporting investment,” he added.
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