Only modest economic growth is forecast for the West Midlands over the next 5 years

A continuing under–representation of higher value added sectors means that the pace of economic growth in the West Midlands over the next five years is forecast to be modest.

Gross Value Added (GVA)

The Observatory’s new report The West Midlands economy post recession: key issues and challenges (pdf, 844kb) forecasts GVA to grow by just 11% (£9 billion) between 2010–2015. This compares with growth of 15% (£11 billion) between 2000–2007.

While the pace of growth is forecast to be strongest in higher value added private sector activities (such as ICT & telecoms and high value added business & professional services), they account for only a limited share of GVA. Growth is expected to be much weaker in sectors that dominate the regional economy such as lower value added, traditional private sector activities and the public sector.

Geographically, GVA is forecast to grow most strongly (by some 13% between 2010–2015) in areas identified as those with potential to lead the region’s recovery such as Solihull, Warwick and Stratford-on-Avon.

The weakest growth (less than 9% over the period) is expected in areas identified as having long-term issues that may inhibit recovery such as Wolverhampton, Walsall, Stoke-on-Trent and Sandwell.

Employment

At 5% over the period (representing the creation of just over 11,000 net new jobs) employment growth is forecast to be similarly modest.

Again the pace of job growth is expected to be strongest in these higher value added activities.

Click the image below to see see a chart showing absolute change in employment by sector in the West Midlands between 2010–2015:

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Job shedding is forecast to continue, meanwhile, in traditional private sector industries such as engineering and manufacturing, and also in public sector activities such as education, public administration and health & social care.

Geographically, the most significant new job growth is forecast to be in areas identified as those with potential to lead the region’s recovery such as Solihull and Warwickshire.

In contrast employment is expected to continue to fall in areas identified as having long term issues that may inhibit recovery such as Wolverhampton, Stoke-on-Trent and Sandwell.

Falling employment levels are also forecast in a number of rural areas — notably Bridgnorth, Herefordshire, North and South Shropshire and Wychavon districts.

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