South East keeps pace with UK’s economic growth in Q1 2014
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The South East economy grew by an estimated 0.8% in the first three months of 2014.
Growth is in line with UK, securing the South East a mid-table finish among the English
regions.
Output in wholesale and retail, and a buoyant property market supported the region’s
economy.
Wet weather early in the year hindered construction, holding the regions growth back
The RBS Regional Growth Tracker estimates the South East economy turned in a solid performance in the first quarter
of the year. The UK is growing at its fastest pace since 2007 and the South East of England didn’t disappoint. Yet the
region’s economy was held back by slow growth in both construction and the technology sectors. While the wet weather
explains the first, the reason for the second is less clear.
Stephen Blackman, senior economist at RBS said:
“The South East finished mid-table for economic growth in Q1 2014. It’s a decent performance, given the UK economy
has a spring in its step and the region is keeping pace. Output has expanded for five consecutive quarters meaning the
region’s output is 3.3% higher than it was at the end of 2012.
“Some may be surprised the region didn’t secure a higher finish. The reason it didn’t lies within the South East’s sectormix, or the types of businesses on which the economy most depends. Construction and ICT are more important for the
South East than for the other English regions on average. And growth in both sectors underperformed the UK average.
“But to match the UK’s solid 0.8% growth means other sectors important for the region outpaced average UK growth.
The two sectors providing the biggest boost were wholesale and retail trades and real estate. Each makes up 13% of the
region’s output and both grew faster then the UK.
“Although Milton Keynes remains one of the regions economic hot spots, other areas are growing faster. These include
Buckinghamshire, Oxfordshire and West Sussex.
“Overall this is a solid performance and one that also leaves room for improvement. Those who are surprised by the
position of the South East in the league table should take comfort that a rebound in construction should support the
South East to secure a higher spot in the regional league table in Q2.”
Key facts from the rest of the UK
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Average growth of economy (q/q) for UK as a whole was 0.8%
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Top performing region was the East Midlands, with the North West trailing the pack.
Results of our analysis
We estimate that the South East economy grew by 0.8% in Q1 2014 up from 0.7% in Q4 2013 – Chart 1. This was in line
with the UK as a whole (0.8%). This makes it the fifth fastest growing English region – Chart 2.
Chart 1: q/q growth
Chart 2: q/q growth league table – UK regions
Source: RBS calculations using ONS data
Source: RBS calculations using ONS data
Real GVA growth (%qq) (UK average=0.8%)
Real GVA growth in Q1 2014 (% q/q) (UK average=0.8%)
1.5%
1.2%
1.0%
1.0%
0.5%
0.8%
0.0%
0.6%
-0.5%
0.4%
1.0%
0.9%
0.8%
0.8%
0.8%
0.8%
0.8%
0.7%
0.7%
SW
NE
NW
0.2%
-1.0%
2010
2011
2012
South East
2013
2014
0.0%
EM
UK
L
YH
EE
SE
WM
We calculate our growth estimate by taking the UK growth rate of each sector and weighting them by the sector shape of
the East of England economy.
Table 1: Sector shape of the South East economy
Chart 3: y/y growth
Source: RBS calculations using ONS data
Source: RBS calculations using ONS data
Agriculture
Mining & Quarrying
Manufacturing
Utilities
Water & Waste
Construction
Wholesale, Retail & Autos
Transport & Storage
Hotels & Restaurants
ICT
Finance & Insurance
Real Estate
Professional Services
Support Services
Public Admin & Defence
Health
Education
Arts & Entertainment
Other Services
Household activities
Share of SE economy (%)
1
0
9
1
1
7
13
4
3
10
5
13
8
5
4
6
7
2
2
1
Real GVA growth (%yy) (UK average=3.0%)
q/q growth in Q1 2014
-0.7
-1.1
1.3
-2.0
1.1
0.3
1.4
2.0
1.9
0.4
-0.1
1.0
1.4
1.8
-0.5
0.3
0.7
-0.1
1.8
0.2
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
2010
2011
2012
South East
2013
2014
UK
Chart 4: y/y growth league table for the UK regions
Chart 5: y/y growth league table for the South East
Source: RBS calculations using ONS data
Source: RBS calculations using ONS data
Real GVA growth in Q1 2014 (% y/y) (UK average=3.0%)
4.0%
3.7%
3.2%
3.0%
3.0%
3.0%
3.0%
3.0%
2.9%
2.8%
NW
L
SW
SE
YH
NE
WM
3.0%
2.0%
1.0%
0.0%
EM
EE
NOTES TO EDITORS
1.
This research has been compiled by RBS economists. The team present to RBS customers around the UK
discussing both the local and national economy, and what this means for Business customers. They produce a
weekly economic update which can be subscribed to here: http://www.rbs.com/news/economic-insights.html
2.
You can follow the economists on twitter: @RBS_Economics
3.
For any questions, or requests to speak with Stephen Blackman please contact the RBS press office on 0207
672 1936.
This material is published by The Royal Bank of Scotland plc (“RBS”). Please note that, whilst this information is believed to be reliable, it has not been independently verified by RBS. Unless otherwise
stated, any views, opinions, forecasts, valuations, prices or estimates contained in this material are those solely of the RBS Group’s Group Economics Department, as at the date of publication of this
material and are subject to change.