Contents. Global outlook. UK economic prospects. The outlook for consumer spending and the impact of automation. Regional growth trends and prospects

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2 Contents Global outlook UK economic prospects The outlook for consumer spending and the impact of automation Regional growth trends and prospects UK Economic Outlook March 2018 PwC 2

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18 Consumer spending growth projected to be sluggish in , but could recover to around 2% trend in the longer term 3.5% 3.0% 2.5% % real growth 2.0% 1.5% 1.0% 0.5% 0.0% s average Source: ONS for , PwC main scenario for 2018 and beyond PwC

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20 We expect the spending shares of more basic categories, like food, alcohol and tobacco, to see the slowest real growth to % 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% Housing and utilities Miscellaneous activities Health Source: PwC main scenario projections Recreation and culture Communications Hotels and restaurants Education Furnishing Transport Alcohol and tobacco Clothing and footwear Food PwC

21 Up to 44% of jobs in retail and wholesale trade could be impacted by automation by the mid-2030s, with clerical jobs the most at risk, but automation should also reduce prices for consumers 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Managers Service and sales staff All retail and wholesale Clerical staff Source: PwC analysis of OECD PIAAC data PwC

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26 Regions with a greater focus on manufacturing have shown lower relative growth on average over the past 20 years 3.5% 3.0% London Scotland East of England Average GVA growth % 2.0% 1.5% 1.0% South East South West Northern Ireland North East North West Wales East Midlands West Midlands 0.5% Yorkshire and the Humber 0.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Average of Manufacturing as a Percentage of GVA in Source: PwC analysis of ONS data UK Economic Outlook March 2018 PwC 26

27 Whilst other sectors, like professional, technical and scientific services have shown a positive correlation with relative regional GVA growth 3.5% 3.0% London Average annual GVA growth % 2.0% 1.5% 1.0% 0.5% Northern Ireland Scotland East Midlands Wales South West North East West Midlands Yorkshire and the Humber South East East of England North West 0.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% Average of Professional, scientific and technical activities as a percentage of GVA in Source: PwC analysis of ONS data UK Economic Outlook March 2018 PwC 27

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29 Recently, there have been signs that other regions are starting to catch up with London, notably for house prices 9.0% 8.0% House price change in year to December 2017* 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Scotland South West East Midlands West Midlands East Midlands North West Wales United Kingdom East of England Northern Ireland South East *Except for Northern Ireland where data are for year to Q as monthly data are not available Source: ONS house price index based on Land Registry data UK Economic Outlook PwC North East Yorkshire and The Humber London March

30 The rise in London s employment rate over the past year has also been close to the UK average, whilst the North East has witnessed the largest increase over this period 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% North East East of England South East South West London UK Scotland North West West Midlands Wales Yorkshire and the Humber East Midlands Northern Ireland Source: ONS UK Economic Outlook PwC March

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33 Contacts for more information about this report John Hawksworth (Chief Economist) Barret Kupelian (Senior Economist) George Mason (Economist) For more information on our Economics services, or to access the full report, please see our website at: This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details.