Long-run growth prospects for the UK’s regions

The UK faces a number of economic challenges in the short- to medium-term. Renegotiation of trading arrangements with the European Union is the most prominent of these. We build on existing macroeconomic analysis of these challenges by projecting the effects on the UK’s regions. The forecasts are generated by combining a global macroeconometric model and a regional computable general equilibrium of the UK. The macroeconomic forecasts show a national average annual GDP growth rate of 1.71% to 2044. When the macroeconomic forecasts are applied across regions growth rates range from 1.64% for Cambridge to 2.17% for Pembrokeshire. Despite such wide variation the standard deviation is low at 0.07% and the coefficient of variation is 0.04%. The country results favour Scotland, which grows at annual rate of 1.78%, whereas Wales is the slowest growing of the countries at 1.70%. Consistent with the macroeconomic analysis international trade is the most important contributor to the regional variation in growth rates.