North East climbs the UK economic growth tables

Analysis of economic growth over Q3 shows the North East overtook the North West, South West and West Midlands

Royal Bank of Scotland
Royal Bank of Scotland

Economic growth in the North East over the last quarter has outstripped other regions, new analysis has shown.

The region moved up the league tables ahead of the North West, South West and the West Midlands in the RBS Regional Growth Tracker Q3.

Growth of 0.6% across the region was fuelled largely fuelled by strong gains in the IT and communications sector, as well as more modest advancement in manufacturing.

Economist at RBS pointed towards the fall in unemployment across the region, driven the creation of 27,000 jobs in the last year, as a key contributor to the North East’s growth - which was in line with the wider UK

The wholesale and retail, transport and storage, and health sectors were all pointed to as contributors.

Darlington led the list of sub-regions with year-on-year growth of 3.2%, up from growth of 2.8% in Q2. Growth in Northumberland had slipped from 3.2% in Q2 to 2.1% in Q3, while Sunderland fell from 2.6% to 1.9%.

Speaking to The Journal, RBS economist Marcus Wright, said the North East should take confidence from the balance of growth across sectors.

He said: “When you look outside of London, it is the North East which is delivering the strongest growth in the IT sector.

“While this quarter’s manufacturing performance was more modest, the region is still very much a mid-table contender, which is good. Outside of these areas we’ve seen positive movement in the professional, scientific and technical sectors.”

While there has been jobs growth over the North East in the past year, Mr Wright pointed to a “slight swing” in the regional labour market towards lower paid jobs.

He added: “The only point that concerns me is the rate of wage growth, not just in the region, but across the UK. It’s a challenge to achieve it but we need that wage growth before the current low rate of inflation begins to rise.”

Nationally the Growth Tracker showed a broad based recovery, unsurprisingly led by London. The report highlighted that despite continuing job creation in the capital, average earnings have actually fallen over the year.

Rupert Seggins, another RBS economist said: “If the first three months of the year was a manufacturing story, the second has been a services one with the top three service sectors being professional; scientific and medical, administrative and support and distribution and transport services.”

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