PwC

Global outlook

UK economic prospects

The outlook for consumer spending and the impact of automation

Regional growth trends and prospects

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UK Economic Outlook March 2018

PwC

Consumer spending growth projected to be sluggish in 2018-19, but could recover to around 2% trend in the longer term

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2015 2016 2017 2018 2019 2020s average

% r

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wth

Source: ONS for 2015-17, PwC main scenario for 2018 and beyond

PwC

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

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We expect the spending shares of more basic categories, like food, alcohol and tobacco, to see the slowest real growth to 2030

Source: PwC main scenario projections

PwC

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Managers Service and sales staff All retail and wholesale Clerical staff

Up to 44% of jobs in retail and wholesale trade could be impacted by automation by the mid-2030s, with clerical jobs the most at risk, but automation should also reduce prices for consumers

Source: PwC analysis of OECD PIAAC data

PwC

Regions with a greater focus on manufacturing have shown lower relative growth on average over the past 20 years

March 2018UK Economic Outlook

26

North East

North West

Yorkshire and the Humber

East Midlands

West Midlands

East of England

London

South East

South West

Wales

Scotland

Northern Ireland

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%

Avera

ge G

VA

gro

wth

1998

-2016

Average of Manufacturing as a Percentage of GVA in 1998-2016

Source: PwC analysis of ONS data

PwC

Whilst other sectors, like professional, technical and scientific services have shown a positive correlation with relative regional GVA growth

March 2018UK Economic Outlook

27

North East

North West

Yorkshire and the Humber

East Midlands

West Midlands

East of England

London

South East

South West

Wales

Scotland

Northern Ireland

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0%

Avera

ge a

nnual G

VA

gro

wth

1998

-2016

Average of Professional, scientific and technical activities as a percentage of GVA in 1998-2016

Source: PwC analysis of ONS data

PwC

Recently, there have been signs that other regions are starting to catch up with London, notably for house prices

March 2018UK Economic Outlook

29

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

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Source: ONS house price index based on Land Registry data

*Except for Northern Ireland where data are for year to Q4 2017 as monthly data are not available

House price change in year to December 2017*

PwC

The rise in London’s employment rate over the past year has also been close to the UK average, whilst the North East has witnessed the largest increase over this period

March 2018UK Economic Outlook

30

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

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UK

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Source: ONS

Contacts for more information about this report

John Hawksworth (Chief Economist) – john.c.hawksworth@pwc.com

Barret Kupelian (Senior Economist) – barret.g.kupelian@pwc.com

George Mason (Economist) – george.mason@pwc.com

For more information on our Economics services, or to access the full report, please see our website at:

http://www.pwc.co.uk/economics

http://www.pwc.co.uk/ukeo

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