Why Preston has the fourth-fastest growing economy in the UK

A new report shows how the UK will overcome disruption in 2022, and the north-west city of Preston is one of the frontrunners leading economic recovery. 

Leading UK law firm Irwin Mitchell has released a new breakdown of 50 of the largest local economies by employment and GVA growth. In it, it ranks how well certain places have performed in terms of their economic positions in the final quarter of 2021.

Preston, which sits not from from Greater Manchester in the north-west of England, comes in fourth position in Q4’s list. The city boasts a GVA of £4.2bn, with 8.5% growth over the course of the past year. It comes behind Southampton in pole position with a 9.2% rise in its GVA, followed by Milton Keynes (9%) and Stoke-on-Trent (8.6%).

The report notes: “The story of the UK economy throughout 2021 has been one of recovery. This is despite GDP decreasing by 1.4% in Q1 2021, compared to Q4 2020, as the UK dealt with further lockdown measures, which remained in place until mid-April.”

The University of Central Lancashire has a big part to play in Preston’s economic growth story, says the report. Employing around 38,000 and prompting additional regeneration and development in the surrounding area, the university is a central hub of the city.

Preston top spot for regeneration

Preston’s City Living project has spelled big changes for the city, and increased investment. Through the project, Preston City Council is helping deliver much needed high-quality city centre accommodation. The council, along with Hive Land & Planning, are looking to “de-risk” 50 brownfield sites to attractive private investment. This will lead to the construction of more than 3,000 homes.

Chris Hayward, director of development and housing at Preston City Council, said earlier this year: “We have a vision to grow Preston into a modern and vibrant city, and attractive, affordable accommodation for residents is vital for this aim. We’re pleased this work has been recognised by the judging panel.”

The city was also awarded £20.9m earlier this year through the Towns Fund, announced in Rishi Sunak’s Spring Budget. The money will go towards a series of regeneration projects in Preston city centre.

Construction making a comeback

Irwin Mitchell’s report shows that construction and the services sectors were big drivers for growth over the past 12 months. The construction sector grew by an impressive 3.8% over the second quarter, according to the data.

The report adds: “The single largest acceleration in growth was in the accommodation and food services industry, where GVA grew by 87.6% in Q2 2021. Education also saw strong growth in Q2 of 20.6%. This is mainly due to the reopening of many schools over 2021 and the fact that most higher education courses were delivered online in Q2 2021.”

Thankfully, employment is also on the rise. Unemployment peaked in the final quarter of 2020 to 5.2%, so an improvement in this area is a key part of the country’s economic recovery.

“Joblessness decreased throughout 2021, reaching 4.5% in the three months to August 2021,” says the report. “For comparison, the unemployment rate was 3.9% in the last three-month period that was unaffected by the pandemic (November 2019 to January 2020).”

Predictions for 2022

Recovery in the future is “unlikely to be linear or even uniform”, according to Irwin Mitchell partner Hannah Clipston.

“Over the next 12 months our report predicts that manufacturing’s output will grow by 3.5% whilst for hospitality it will grow by 35%. This has a huge impact on the variations that we are seeing in terms of growth in different locations and should be considered by the government as it looks to level up and tackle the north-south divide.”

As far as Preston is concerned, it may not be predicted to be one of the areas leading economic growth in 2022, but further afield Greater Manchester is expected to see strong performance. Manchester ranks in the top 10 for employment growth.

The composition of Manchester labour market makes it largely resilient to the effects of public health measures, says the report. It adds: “The University of Manchester is another large factor for the local economy, as it has established itself as one of the country’s leading institutions of higher education.”