• Swindon & Wiltshire Economy
• Wednesday March 19 2025
• Author Name: Peter Davison

Reading set to be UK’s fastest-growing local economy over next three years – with Bristol third

Reading is forecast to be the UK’s fastest-growing local economy over the next three years – with Bristol the third fastest-growing after Manchester.

The Berkshire town is expected to enjoy an average annual GVA growth rate of 2.2 per cent between 2025 and 2028, according to the latest EY Regional Economic Forecast.

Bristol’s economy, meanwhile, is forecast to grow at 1.6 per cent.

Regionally, the economies of both the South East and South West are expected to grow at 1.6 per cent – at joint second place just behind London and the South East.

The Reading picture

Reading’s economy is forecast to grow more quickly than Manchester (2.1 per cent) and Bristol (1.6 per cent).

Reading is also expected to be the second fastest local economy for job opportunities, with an average annual employment growth of 1.1 per cent over the next three years.

The South East is expected to be the UK’s third fastest-growing region for employment growth and match the national average with a projected average annual increase of 0.7 per cent between 2026 and 2028.

Knowledge-intensive industries are expected to be among the South East’s strongest growing sectors over the next three years. Information and communication – which involves technology-led activity – and professional, scientific and technical activities – which includes R&D as well as business-to-business services – are expected to achieve average annual GVA growth of 2.6 per cent and 2.2 per cent respectively.

Employment in the South East’s professional, scientific and technical activities sector is forecast to grow by an average annual rate of 1.6 per cent between 2025 and 2028, more than double the region’s predicted overall employment growth rate of 0.7 per cent.

The information and communication and professional, scientific and technical activities sectors are expected to be Reading’s leading growth sectors over the next three years, forecast to record 2.9 per cent and 2.8 per cent average annual GVA growth respectively.

The professional services sector is expected to be Reading’s fastest-growing sector for job opportunities, recording average annual employment growth of 2.2 per cent over the next three years. The two sectors currently contribute nearly half (45 per cent) of all GVA recorded in Reading.

Construction is expected to be among the South East’s fastest-growing sectors for average annual GVA (2.3 per cent) and the region’s fastest-growing sector for average annual employment (1.7 per cent) over the next three years.

Construction activity nationwide is expected to be supported by the Government’s ambition to increase housing delivery and investment in transport, however most of the new jobs are expected to be located in London and the South East, driven by infrastructure projects and housing demand.

Gareth Anderson, EY managing partner for the South East of England, said: “There are clear grounds for optimism in the South East’s economic outlook, with steady growth forecast over the next three years.

“The region’s high concentration of tech and professional services businesses means that it’s well-placed to benefit from the nationwide growth expected in these knowledge-intensive sectors.

“The Government’s ambitious housing delivery programme and reforms aimed at accelerating the planning process are set to stimulate growth in the construction sector in the South East, where demand for new housing is particularly high.

“Reading is once again forecast to be the UK’s leading location for growth over the next three years, driven in large part by the town’s ecosystem of tech and professional services firms.

“Reading’s position on the M4 corridor, strong transport links and established workforce of skilled professionals have made the town an attractive destination for investment and built a robust and resilient local economy.

“While Reading’s geographic location does offer a distinct advantage, the town also exemplifies how ongoing investment in infrastructure and ensuring the right skills are accessible in the right locations can foster high-growth, sustainable local economies.”

The Bristol picture

Bristol is expected to be the UK’s joint-third fastest-growing town or city outside London, behind only Reading and Manchester and level with Cambridge, while the South West is set to return to moderate growth over the coming years, matching the South East and Northern Ireland as the UK’s joint-second fastest-growing regional economy.

However, economic momentum will take time to build and the South West’s growth is expected to remain muted in 2025, with 0.9 per cent GVA growth forecast in the region over the next 12 months, slightly below the forecast UK national average of 1.0 per cent.

Bristol is forecast to record an average annual GVA growth of 1.9 per cent, making it the UK’s joint third fastest-growing town or city outside London, behind only Reading and Manchester and level with Cambridge. The city’s annual GVA and employment growth are both expected to surpass the UK national average of and 0.7 per cent respectively.

Like Reading, knowledge-intensive industries are expected to be among the South West’s strongest growing sectors over the next three years. Information and communication – which involves technology-led activity – and professional, scientific and technical activities – which includes R&D as well as business-to-business services – are expected to achieve average annual GVA growth of 2.5 per cent and 2.3 per cent respectively.

The professional, scientific and technical activities sector is forecast to be of the South West’s fastest-growing sectors for job opportunities over the next three years with an average annual rate of 1.7 per cent between 2025 and 2028. This is more than double the region’s overall forecast employment growth rate of 0.7 per cent.

The sector will be particularly crucial for Bristol’s economy, with the city’s professional services sector expected to record average annual GVA growth of 2.6 per cent over the next three years.

The electricity, gas and steam sector, which includes everything from electricity generation, transmission, trading and distribution to fuel mains, is also expected to be one of the South West’s leading sectors with 2.5 per cent average annual GVA growth between 2025 and 2028.

This partly reflects the anticipated growth of the South West’s renewable energy generation.

The arts, entertainment and recreation sector is also forecast to be a leading contributor to the South West’s economy, with average annual growth of 2.5 per cent in GVA and 1.7 per cent in employment expected for the next three years.

The sector is expected to fare better in the South West than in the rest of the country, with 1.9 per cent GVA growth and 1.2 per cent employment growth forecast for the sector across the UK.

The South West’s Accommodation and food service sector is expected to see average annual GVA growth of 2.3% over the next three years, compared to the 1.8 per cent GVA growth forecast for the sector nationally.

Karen Kirkwood, managing partner at EY in the South West, said: “As the UK economy continues to recover, the South West is well-positioned to leverage its strengths in key sectors.

“The region’s economic momentum is expected to be underpinned by its relatively high concentrations of skills in high-value add sectors like tech, renewable energy and professional services, which are expected to be particularly important for Bristol’s position as a leading UK city for growth.

“Household spending is expected to rise over the coming year as consumers become more confident, and this should be good news for the South West’s hospitality sector.”

The national outlook

While the national economy currently remains subdued, the growth outlook the country and for most regions is expected to improve through 2025, thanks to a combination of falling inflation, rising real wages, and steady reductions to interest rates. This is expected to drive average annual GVA growth of 1.6 per cent for the UK between 2025 and 2028.

The UK is forecast to see relatively flat annual employment growth of 0.7 per cent over the next three years as businesses continue to face elevated costs due to energy prices and the upcoming rise in employers’ National Insurance Contributions.

However, degrees of growth in knowledge-intensive sectors will also be felt in local economies across the country. Employment in professional, scientific and technical activities is expected to grow on average by 2.3 per cent per year in Manchester, 2.2 per cent in Cambridge, and 1.9 per cent in Edinburgh. Strong growth is expected in information & communication activities in Stirling (1.4 per cent) and Leicester (1.2 per cent).

The slowest rates of average annual GVA growth in the UK over the next three years are expected in Scotland (1.4 per cent) and the North East (1.3 per cent).

Reading image by David Merrett, published under Creative Commons licence