North of England set to benefit from economic upswing, says leading economist

THE North of England is set to benefit from an upswing in economic activity in 2019, provided the UK can secure a transitional agreement with the European Union, according to a leading economist.

Cities like Leeds could benefit from an upswing in economic activity next year. Picture by Simon Hulme
Cities like Leeds could benefit from an upswing in economic activity next year. Picture by Simon Hulme

Dean Turner, economist at the UK investment office of UBS Wealth management, also believes that UK firms will still be able to attract skilled workers from overseas after Brexit.

On Monday, Prime Minister Theresa May called off the House of Commons vote on her Brexit plan after admitting opposition from her own MPs meant she would have lost by a “significant margin”. Business leaders have warned that the country risked “sliding towards a national crisis”.

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However, Mr Turner said: “The most likely outcome is going to be that a withdrawal agreement of some kind can be agreed, and that withdrawal agreement will be ratified by Parliament, and the UK leaves the European Union on March 29 and (goes) on to the transitional arrangements.

He added: “Looking at the individual regions, on our assumptions the UK can get to a transitional arrangement with the European Union, I would expect that all areas of the economy, including the North, can actually benefit from the upswing in economic activity.

“Business investment is likely to be released. The ongoing benefit of an undervalued sterling should continue to benefit exporters in the region.”

He said economists must keep a keen eye on the jobs market.

He added: “There doesn’t seem at the moment to be any concerns about the outlook for employment growth.

“That is finally translating into pretty decent levels of wage growth. It’s our expectation that that benefit will be felt throughout the economy, (and) that’s something that should help support consumption in the area. So on consumption and business investment, the outlook is quite encouraging in the North, as it is for the rest of the UK.”

He acknowledged that problems remained over the skills deficit.

He added: “All governments have tried to address this situation for a number of years. We can only solve this over the long term by improved investment in education and training.

“It’s too early to comment on whether the current range of Government policies are going to deliver that. Some of the more immediate concerns will clearly be around what happens to immigration policy post Brexit.

“It’s worth bearing in mind that, assuming the UK moves on to a transitional arrangement, then the current relationship with the EU does not change for 18 months.

“Some of the short term concerns should be mitigated but ultimately we will have to see what the Government’s immigration policy is over the long term.

“No matter what happens in terms of the relationship with the EU..the ability of the UK to contnue to attract highly skilled workers should remain undiminished.”

INVESTORS will need to weather more volatility in order to capture opportunities in 2019, according to the Year Ahead report from UBS, the wealth manager.

UBS predicts that global economic growth will decelerate next year to 3.6 per cent from 3.8 per cent in 2018 and company earnings will grow at a slower rate.

Mark Haefele, chief investment officer at UBS, said: “Investors should retain positions in global equities but plan for market volatility. A slight slowdown in economic and earnings growth doesn’t mean no growth, and the recent sell off has left a number of assets more attractively valued.”