PwC UK's latest forecast predicts subdued GDP growth for the South East in 2024

• PwC UK’s latest UK Economic Outlook predicts increased growth for the South East in 2024, compared with 2023.

• South East’s growth will remain subdued compared with predicted fastest-growing regions - London and Northern Ireland.

• The UK’s real GDP is predicted to grow by 1.0% in 2024, up from the 0.5% prediction made in the November 2023 Outlook.

• Inflation returned to 2% target, and will likely bounce around this level for the remainder of 2024.

The South East economy is predicted to grow more this year, with real GVA expected to be 0.8% higher across 2024 - according to the latest PwC UK Economic Outlook. This equals a doubling of predicted growth for the region, compared to PwC’s November 2023 Outlook, which projected GVA growth of 0.4%.

The doubling of the rate of growth is positive, but the South East’s growth remains marginally lower than the predicted rate for real GDP for the whole of the UK, which PwC projects will grow by 1.0% in 2024.

The South East is still outperforming the West Midlands (0.7%) and is on par with the North East (0.8%). London and Northern Ireland are both predicted to see the biggest growth at 1.2%, followed by the North West and Wales (both 1.1%), the East of England (1.0%), Scotland, South West and East Midlands (0.9%).

The continuing regional disparities highlight strong growth in business activity and the public sector boosting London and Northern Ireland in particular. 

Other factors driving these predictions include business and financial services, as well as IT, which are important sectors for the South East region. Despite historically being among the fastest growing sectors in the UK, they have experienced stagnation or contraction over the past year, following a surge during the pandemic.

PwC's recent Framework for Growth report emphasises the significance of localised strategies in driving growth across different sectors. The report identifies the key components that business leaders believe would effectively address barriers to growth and productivity. According to business leaders interviewed for the report, the changes most critical to their business - the skills system, planning system, infrastructure investment and overall support made available to smaller businesses - were best driven at a local level.

Julian Gray, Regional Market Leader at PwC South East, said:

“Although the South East lags behind some other regions, the outlook remains promising given the projected doubling of real GVA growth. This is an opportune moment for businesses in the South East to collaborate closely with the new Government, leveraging opportunities for targeted interventions that stimulate regional economic growth.

“PwC's recent Framework for Growth identifies critical areas that drive UK-wide growth and provides insights into how tailored interventions can benefit various sectors and regions. By implementing a localised strategy informed by businesses and inclusive of public sector support, the South East can realise significant benefits. Aligning with the new Government priorities such as partnering with businesses to deliver economic growth, getting more people into work, and fostering talent and skills will be essential in maintaining this upward trajectory and ensuring long-term prosperity for the region and the wider UK.”

Skills and youth employment could boost the regional economy

Another report co-produced by PwC and Connectr - the Youth Employment Index - found that the South East’s economy could gain over £3bn per year by improving youth employment, training and education prospects.

The South East NEET (not in education, employment or training) rates are relatively high compared with other areas of the UK, with over 121,000 (13.1%) of 16 to 24 year olds across the region falling into this category. At the opposite end of the spectrum, the South West recorded the lowest (7.8%). 

Should the South East’s NEET rate be brought down to equal that of the South West, it would see the largest annual economic benefit of all the UK nations and regions - of around £3.4bn.

The report estimates that each young person taken out of NEET could provide GDP benefits of £65,000 per year. If all UK’s nations and regions were able to lower their youth NEET rates to match the top-performing South West region, this would result in 324,000 young people moving out of NEET status, and GDP gains of approximately £23bn annually. 

Julian Gray, Regional Market Leader at PwC South East, said:

“The high proportion of young people classed as NEET is unacceptable and further work is required to nurture and support a talented future workforce. At PwC, we have seen the benefits of apprenticeships and skills programmes and we continue to work towards improving both digital and soft skills among the younger generation in partnership with our local communities and other organisations.

“While skills, training, and employment are the key factors in boosting the economy, they are only part of the broader array of contributors driving economic growth and reducing regional disparities. Collaborating with businesses and authorities to capitalise on the strengths of the South East region, while prioritising skills and employability, will be essential. This holistic approach ensures that we not only drive economic growth but also cultivate a skilled and talented workforce for the future.”