1. Economic outlook for Greater Manchester
Anthony Light
4th May 2016

2. Overview The baseline outlook for Greater Manchester
Key headlines from GMFM 2015
Comparisons between GMFM 2014 and GMFM 2015
Alternative economic futures
Accelerated Growth Scenarios for Greater Manchester
BREXIT

3. Economic Outlook for Greater Manchester (GMFM 2015)

4. Greater Manchester growth in line with the UK

5. GVA growth in Devolution Deal areas

6. 147,000 more jobs in Greater Manchester by 2035

7. Jobs growth supported by rising employment rate

8. Business services lead job creation…

9. …and GVA growth

10. Sector story helps explain local disparities

11. …but its not all about business services

12. Job creation will be centred on Manchester

13. Population growth fuelled by natural change

14. Changes between GMFM 2015 and GMFM 2014

15. Most revisions due to new historical data
Information included in GMFM 2015
OE global, national and North West outlook November 2015
BRES (revised 2013 and new 2014 data)
Mid-year population estimates (new 2014 data)
Housing stock, house prices (new 2014)
Earnings (revised 2013 and new 2014 data)
Resident employment (new 2014 data)
Unemployment (new 2014 data and 2015 estimate)
Carbon emissions (new 2013 data)
Regional GVA (new and revised data available to 2013, move to 2012 prices)
Changes to the national/international outlook also matter

16. Data revisions can be sizeable

17. Modest downgrade to long term growth…

18. …fewer jobs reflects data revisions

19. Larger population due to higher net-migration

20. Alternative economic futures
Accelerated growth scenarios
BREXIT

21. An aspiration for higher growth – the AGS SNPP
Greater Manchester aspires to better the baseline forecast
The development of a ‘Northern Powerhouse’ - the long term economic plan - provides a helpful framework for understanding what this future might look like
The accelerated growth scenario “AGS SNPP” adopts ‘long term economic plan’ growth aspirations and population growth in line with the ONS 2012 projections. These are higher than GMFM
Development of the scenario was an iterative process carried out in spring/summer 2015, using GMFM 2014 as the baseline
Rather than being a forecast, the AGS SNPP is an illustration of the potential scale and composition of economic growth and demographic development in a high growth scenario

22. AGS SNPP – key assumptions
The North West grows in line with the UK average
All sectors grow faster than the baseline, but private services contribute most to additional growth
Greater Manchester ‘leads’ rather than ‘follows’
Sector profile of growth and Greater Manchester’s relative strength in these sectors supports above average growth
Consistent with local aspirations for stronger economic development
Other parts of the North are not as well placed as Greater Manchester to facilitate faster growth
AGS SNPP adopts GMFM baseline sector-specific productivity assumptions

23. AGS SNPP – headline results, 2015-35
Greater Manchester GVA
GMFM % p.a.
AGS SNPP 2.8% p.a.
GM stronger than UK and narrows the gap with London
Greater Manchester jobs
GMFM % p.a.
AGS SNPP 0.7% p.a.
AGS SNPP provides higher resident employment and increase in commuting
Greater Manchester productivity
GMFM % p.a.
AGS SNPP 2.1% p.a.

24. But what if future net-migration is higher?
GMFM baseline forecast incorporates OE population projections
AGS SNPP incorporates ONS 2012 population projections
The main uncertainty regarding demographic growth is the future scale of net migration
ONS / AGS SNPP assumes lower net migration to Greater Manchester in the future than has been seen over the last decade
We have assessed the impact of an alternative demographic profile for:-
Population
Economic / employment growth
Implications for local infrastructure and policy

25. Demographic scenario – AGS Higher
An alternative population projection incorporating higher migration assumptions was developed by AGMA using POPGROUP model – ‘AGS Higher’
AGS SNPP economic forecast adjusted to account for a larger population
Additional people assumed to share the same relationship with the labour market as the existing population (labour market status and sector composition of employment)
Population growth
GMFM baseline 0.4% p.a.
AGS SNPP 0.5% p.a.
AGS Higher 0.9% p.a.

26. AGS Higher – headline results, 2015-35
Greater Manchester GVA
GMFM % p.a.
AGS SNPP 2.8% p.a.
AGS Higher 3.3% p.a.
In AGS Higher, GM grows faster than Greater London and well ahead of the UK average
Greater Manchester jobs
GMFM % p.a.
AGS SNPP 0.7% p.a.
AGS Higher 1.1% p.a.

27. Implications of accelerated growth scenarios
Scenarios are an illustration rather than prediction
Faster economic growth, higher employment, more commuting and a larger population have infrastructure implications
Transport networks, demand/supply of employment land, housing and energy
Education, health, social care and leisure
Accelerated growth scenarios assume the majority of additional jobs are taken by local residents who would otherwise not be participating in the labour market
Need to ensure they have the relevant skills and opportunities…
…if not, accelerated growth can only be accommodated through higher migration and/or commuting

28. BREXIT

29. Surveys flag a slowdown in activity…
D:\NewChart\UK\Historical\PMI Chart.xls ‘PMI Chart (2)’

30. …services alone are supporting growth
Z:\UK Team\ST_Output\Table.xls ‘Chart1a’

31. ‘Remain’ appears to be the most likely result…
Bookmakers’ odds:
Remain: 2/5
Leave: /5
Implied probability of Brexit = 29%
Source: Betfair 27 April
Z:\UK Team\Brexit\Brexit Charts.xls ‘Chart6’

32. …in which case growth should recover in 2016H2

33. What will be the likely economic impact of BREXIT?
Independent study by OE
If the public vote to leave the EU, the outcome of trade negotiations and UK policy response will be decisive in determining the long economic term impact
Best-case scenario:
Britain enters a custom union arrangement with the EU and takes a liberal approach towards migration and business regulation.
Loss of 0.1% of GDP by 2030.
Worst-case scenario:
Britain reverts to most-favoured nation status, aggressively clamps down on migration and undertakes little regulatory reform.
Loss of 4% of GDP by 2030

34. Key points
GMFM 2015 sees Greater Manchester growing in line with the UK average over the medium to long term
Modest forecast revisions (GVA down, population up)
Accelerated growth scenarios illustrate what the scale and composition of growth might look like – and what the implications might be
UK growth has slowed in recent quarters – EU referendum likely to be having an impact on confidence / spending but other factors too
BREXIT could have a long term economic cost depending on how the Government reacts