£1bn blow for region's economy as growth slows in major cities

The study showed the rate of growth slowed in Bradford, Hull, Leeds and Sheffield.

The figures are contained in Irwin Mitchell’s latest UK Powerhouse report, which provides an estimate for the value of goods and services created in an area and the number of people employed.

The report, produced with the Centre for Economic and Business Research, is lowering predictions for the value of Yorkshire’s economy. Three months ago, the value of goods and services created in the region was expected to reach £106.5bn by the end of this year, but this has now been revised downwards by £1bn to £105.5bn.

The study reveals that the economy in Leeds grew by 1.7 per cent in the 12 months to the end of the last quarter in 2015 compared with two per cent in the 12 months to the end of the third quarter. However, the value of the goods and services produced reached £20bn for the first time.

Growth in Sheffield’s economy fell from 1.7 per cent in the 12 months to the end of third quarter to 1.3 per cent at the end of the year. Sheffield was also the only city in the study to see the number of people employed fall in the year.

Hull’s economy grew at the same rate as that of Leeds while Bradford’s growth rate fell from 1.6 per cent to 1.2 per cent.

The report’s projections for the next 10 years still show that London will continue to grow at a much faster rate than the rest of the UK. It predicts that by the end of 2025, London’s economy will have grown by 26 per cent from 2015.

However, big increases are also predicted in the economies of the North with Leeds’s expected to increase by 17.1 per cent and Sheffield’s expected to rise by 15.1 per cent.

Paul Firth, regional managing partner of Irwin Mitchell’s Sheffield office, said: “Manufacturing forms an important section of the Sheffield and Yorkshire economy.

“While steel no longer dominates, the well-documented issues within the UK’s steel industry has been one factor weighing on employment across the region, much as it has done in other areas of the UK.

“In addition to private sector job cuts, Sheffield has also increasingly seen public sector employment come under pressure.”

The report’s findings follow the Budget last month which included a £300m pledge to improve journey times between the North’s largest cities.

Mr Firth added: “Increasing infrastructure investment to reduce journey times and improve connectivity across the north of England is vital if the ‘Northern Powerhouse’ is going to succeed.

“Not only should there be a significant increase in infrastructure spending in the North, the Government must listen to businesses when deciding where its transport hubs should be located. In Sheffield, for example, the Government’s current plan is to locate the HS2 station at Meadowhall even though the financial benefits of it being located in the city centre are shown by all the data to be manifestly far greater.”

Andrew Walker, from Irwin Mitchell in Leeds, said: “As one of the leading financial service centres outside of London, the slowdown in financial and insurance services has begun to dent growth within Leeds in the latest quarter.

“In the absence of a flourishing financial sector, however, growing employment in areas such as legal and accountancy services, HR and IT is helping to support growth.”