Differences in economic growth across the UK remained substantial in the year to Q1 2019


Differences in economic growth across the UK remained substantial in the year to Q1 2019

By Stuart McIntyre

ONS estimates of UK GDP growth for Q1 2019 were released on 10th May.

These showed that the UK economy expanded by 1.5% in the year to 2019 Q1, up slightly from the 1.4% growth observed in the year to 2018 Q4.

As part of our work for the ONS to develop methods for nowcasting regional growth we have incorporated these new UK data into our model and produced updated estimates of how this UK growth was allocated among the UK regions.

Our estimates are contained in Table 1 at the end of this blog and presented in Figure 1 below.

Figure 1 – UK and regional growth in the year to 2019 Q1

We can see that growth in the North East of England and Northern Ireland is still estimated to lag well behind the UK as a whole, with London, the South West and Scotland having the highest growth rates.

Comparing these estimates to those released in February enables us to see how the regional economies have performed in the last quarter.

We can see that our new estimates are notably higher for South East, East of England and South West of England. This suggests that these regions were growing more quickly in 2019 Q1.

Conversely, the North West appears to have experienced a slower start to 2019. For most other regions growth is similar to that estimated in February for the year ending in 2018 Q4.

Figure 2 – Comparison of our real GVA growth estimates to those released in February

The next set of official GDP data for the regions of the UK will be released by the ONS in December of this year, and will cover 2018.

However, Scotland has quarterly estimates of GDP growth, produced by the Scottish Government, which are currently available up to 2018 Q4.

These provide a useful benchmark against which to compare our own estimates for economic growth in Scotland.  This comparison is shown in Figure 3.

Figure 3 – Comparison of our real GVA growth estimates to those of the Scottish Government

We can see from Figure 3 that our estimates match the general tendency of those of the Scottish Government over the period of time for which the Scottish Government have published data, but show a little more volatility.

The construction of the Scottish Government data is undertaken slightly differently from the way the ONS produce the regional growth data used in our model (this mostly relates to how regional growth is deflated to account for differences in prices).

Finally, here is a table of our estimates of regional growth in the year to 2019 Q1:

London 2.7%
South West 2.1%
Scotland 2.0%
South East 2.0%
East of England 1.9%
East Midlands 1.6%
UK 1.5%
Yorkshire and The Humber 1.4%
West Midlands 1.2%
Wales 1.1%
North West 1.0%
North East 0.8%
Northern Ireland 0.7%

Table 1: Estimates of growth in the 4 quarters to 2019 Q1

Continuing North – South growth disparities are clearly evident in these latest estimates.

Meanwhile there is little evidence (so far) that we are seeing a sustained pickup in growth in the UK, and of course Brexit related uncertainty remains.

Through the rest of 2019 we will be keeping an eye on the way national growth is distributed across the region and nations of the UK, and keeping you posted on this blog!

The Regional nowcasting estimates  1970 Q2 – 2019 Q1 are available to download at here.  

ESCoE blogs are published to further debate.  Any views expressed are solely those of the author(s) and so cannot be taken to represent those of the ESCoE, its partner institutions or the Office for National Statistics.

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