State of the Economy
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State of the economy Hampshire County Council | July 2020 1 hants.gov.uk Hampshire and Isle of Wight Introduction Core business infrastructure The Hampshire 2050 Commission of Inquiry ran from May 2018 to October 2019. It was established to guide and contribute to the future prosperity, quality of life, and protection and enhancement of the character and environment of Hampshire and to provide a framework for Major business parks which future plans, strategies and ways of working will be packaged. West Portway Business Park Walworth Business Park A considerable amount of information and intelligence was gathered, analysed and discussed at Basing View great length to support the Commissioners in developing a positive Vision for Hampshire 2050, Chineham Business Park and recommendations followed on how Hampshire should achieve that vision. The Commission’s Cody Technology Park conclusions and recommendations are outlined in the Commissioner’s summary report.1 Farnborough Business Park South Hampshire Industrial Park A303 It was agreed that the Hampshire Partnership Board, re-named as the Hampshire 2050 Partnership, Southampton Science Park would be a key vehicle to oversee shared progress against the Commission’s recommendations. Hampshire Corporate Park Further details on the Hampshire 2050 Partnership are available online.2 Solent Business Park Segensworth Scope of this report Solent Enterprise Zone Langstone Economy was one of the six strategic themes • Economic inclusion and skills covered by the Commission. The Commission’s • Demographics vision for this theme is stated as: Since this is a baseline report and not an ‘A thriving and prosperous economy is evidence base report (see Hampshire 2050 essential to support excellent public services, Economy evidence base), the focus is on a provide high quality and inclusive employment snapshot in time (the use of the latest available and business opportunities, maintain and data) with performance at the sub-area and enhance the quality of life in Hampshire, and local authority district level benchmarked reduce inequality and economic exclusion.’ relative to the UK and the South East average. The measures of success for the outcomes In most instances Hampshire will have a gap of the Commission were something the with the UK or the regional average depending Commissioners were keen to define; and it was on the indicator used but the gap will not be agreed that they should be both quantifiable relevant for every indicator. Where appropriate and based on the values identified by the some changes over time are explored. Commission. Global pandemic and economic downturn The State of the economy report builds Districts and employee concentrations Employee concentrations on the Commission’s recommendations. It Indicators used in the baseline report are 1. Eastleigh Aerospace and defence contains quantifiable baseline indicators based annual with varying time lags. As such, the 2. Fareham Digital technologies on the values identified by the Commission current data will not necessarily capture the 3. Gosport Finance and business that will be used to monitor progress on an impact of the global health pandemic and 4. Portsmouth Marine and maritime annual basis. The report is structured around subsequent shock to the economy and labour 5. Southampton Tourism the four broad economy themes plus a brief market. This baseline report will therefore demography theme: capture the state of the economy before the Hampshire ports and airports Business density current economic downturn. Major ports (businesses per 10,000 adult population) • Economy and economic prosperity S - Southampton > 750 businesses • Hampshire businesses David Fletcher, Assistant Director – F – Farnborough 500 - 750 businesses • Jobs and employment Economic Development So - Solent < 500 businesses 1 documents.hants.gov.uk/hampshire2050/2050-summaryreport2019.pdf 2 hants.gov.uk/aboutthecouncil/haveyoursay/visionforhampshire2050/hampshire-2050-partnership/26-november-2019 2 3 Contents 1 Economy and Introduction 3 economic prosperity Economy and economic prosperity 5 Hampshire businesses 21 Jobs and employment 37 Economic inclusion and skills 53 Demographics 71 £65.7bn in GDP in 2018 £38.5 in GVA per hour worked in 2018 or 9.8% above UK average £33,100 in GDP per head or 3% above the UK average 4 5 Economic output Overview Economic output (GDP) Hampshire and Isle of Wight (2018) (GDP components, £billion current prices) Gross Domestic Product (GDP) is arguably the most talked about economic concept in the UK. GDP is a measure of the size and health of Hampshire’s economy over a set period of time. In terms of GDP the economy of Hampshire contributed £65.7bn to the UK economy in 2018. Excluding London, Hampshire’s contribution would be ranked fourth largest in the country against the 24 UK combined authorities/city regions. Hampshire’s economy accounted for over a fifth of the South East economy (21.1%) and over a quarter (26.4%) of VAT and other taxes on VAT products net of subsidies. £4.8 Current status Other • In 2018 Hampshire generated £65.7bn in • At the local level Southampton had the taxes on GDP. When expressed in constant 2016 largest economy in GDP terms (£8.3bn products prices total output was £63.25bn. in constant prices in 2018), followed by GVA Subsidies on products £4.6 £56.7 (-£0.35) Basingstoke (£7.8bn) and New Forest • Nominal output consisted of £56.7bn in (£7.1bn). In GDP terms New Forest was Gross Value Added (GVA), £4.8bn in VAT larger than Portsmouth (£6bn). Economic output (GDP) by sub-area (2018) and £4.6bn in other taxes on products. (£billion in constant 2016 prices and share of Hampshire GDP) Subsidies on products amounted to • However, in Gross Value Added (GVA) £348m in 2018. terms New Forest was smaller than the 30.7% 24.3% 18.6% 13.1% economy of Portsmouth. The difference • With £46.5bn of GDP (in constant prices) is largely explained by a large tax the County area accounted for 73.6% contribution from Fawley Refinery that is of Hampshire’s economic output in included in GDP but not in GVA. 2018. With £19.4bn in GDP (30.7% of Hampshire’s GDP) Central Hampshire is • In GDP terms Gosport was the smallest the largest economic sub-area within economy in Hampshire (£1.2bn) followed South Hampshire Southampton Hampshire. by several mostly rural economies – Isle £11.8 £8.3 of Wight (£2.7bn) and East Hampshire • North Hampshire accounted for about a (£2.8bn). 9.5% 4.3% quarter of economic output (24.3%) while North Isle of South Hampshire accounted for almost Central Hampshire Hampshire Portsmouth Wight £19.4 £15.3 £6.0 £2.7 a fifth of Hampshire’s output (18.6%). The two cities and Isle of Wight combined accounted for about £17bn of GDP or 26.8%. Source: ONS (2020) 6 7 Economic growth Overview Economic output (GDP) by local authority (2018) (£billion in constant 2016 prices) The real (inflation adjusted) growth in Hampshire like the rest of the country was on average sluggish since 2009. Hampshire as a whole had on average a small growth gap with the national average but a larger gap with the South East average. There are significant disparities in economic growth within Hampshire. Faster GDP growth in Hampshire was held back by a relatively large fall in economic output in Southampton. Current status • In GDP terms the real (inflation adjusted) • Southampton was the only sub-area output in Hampshire expanded by 1.6% economy in Hampshire with negative per annum (p.a.) compared to 1.9% p.a. growth between 2009 and 2018. Real in the UK and 2.1% p.a. in the South East. GDP growth in Solent contracted by Therefore, Hampshire as a whole has a 0.7% p.a. 0.3 percentage points growth with the UK average and a 0.5% p.a. growth gap with • At local level GVA growth in Hart, the South East average. Rushmoor, Test Valley, Winchester, Eastleigh and Fareham on average • Economic growth in the County area outpaced the South East average. averaged 2% p.a. faster than the national average but slightly slower than the South • Basingstoke, East Hampshire, New Forest, East average. Havant, Gosport, Portsmouth and Isle of Wight had a growth gap with the • North Hampshire and South Hampshire national average. expanded faster than the South East average. • In GVA terms Southampton was again the only local authority where growth on Growth in real economic output by sub-area and local authority • Central Hampshire and Portsmouth have average contracted by 0.3% p.a. (% p.a. 2009 to 2018, constant prices) a 0.4% p.a. gap with the national average while the Isle of Wight had a 0.8% p.a. GDP UK GVA Basingstoke growth gap with the national average. South East North Hart Rushmoor Hampshire Central falling Test Valley falling GDP East Hampshire Note: to avoid potential distortions to economic growth rates that are caused by VAT and other Hampshire GVA South Winchester taxes on products instead of using GDP, growth rates at local authority district level use GVA. New Forest Hampshire Portsmouth Eastleigh Fareham Havant Southampton Isle of Wight Gosport UK Portsmouth South East Hampshire & Southampton %, p.a. Isle of Wight Isle of Wight %, p.a. -0.8 -0.4 0.0 0.4 0.8 1.2 1.6 2.0 2.4 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Source: ONS (2020) 8 9 Exports Overview Exports of goods by sub-area (2017) (£million and share of Hampshire exports) Hampshire is the largest exporting region in South East England. The openness of the Hampshire economy is illustrated by the fact that exports account for a large share of its 38% 30.7% 18.8% economic output (GVA).