Yorkshire and the Humber’s economy was the least affected by the initial economic impact of the pandemic, according to EY’s latest Regional Economic Forecast. By the end of 2021, the region’s economy, measured by Gross Value Added (GVA), had recovered to 98.8% of its 2019 size – the fastest regional recovery, followed by the North East (98.5%). By contrast, the UK’s GVA had recovered to 97% of its pre-pandemic size. The region’s lead relative to other parts of the UK is forecast to shrink, however, with Yorkshire and the Humber’s GVA set to grow 8.8% relative to its pre-pandemic size by 2025 – ahead of the UK average of 8.3% but behind the East Midlands (up 9.5%), the South West (9%) and London (8.9%). On an annual basis, Yorkshire and the Humber will be the second slowest growing region over the 2022-25 period, expanding by 2.4% on average each year, ahead of the North East (2.3%). This is behind the average annual UK GVA growth of 2.8%. Employment across Yorkshire and the Humber is forecast to rise by 0.8% each year between 2022-2025, the second lowest UK regional or national increase, in line with Wales (0.8%) and behind only the North East (0.7%). By contrast, London is forecast to see the largest employment increase (1.3%), followed by the South East and East of England (both 1.1%). Leeds and Harrogate to bounce back after a slow start The report also highlights the growing gap between the UK’s towns and cities. However, Yorkshire and the Humber has deviated from this trend with Leeds seeing its GVA fall by the equivalent of 0.8% per year from 2019-21 – while the region’s towns saw their GVA fall by 0.5% per year over the same period. Looking ahead though, Leeds is forecast to bounce back between 2022-25 with annual GVA growth of 2.7%, in line with Harrogate (2.7%) and followed by Barnsley and Sheffield (both 2.6%). Leeds’ favourable outlook is underpinned by a supportive mix of sectors and gains in the administrative & support service and professional, scientific & technical sectors. Meanwhile, Hull is likely to experience the region’s lowest average annual GVA growth between 2022-25 at 2.1%, underperforming the regional average (2.4%) and behind Bradford and Rotherham (both 2.2%). Across Yorkshire and the Humber, York is predicted to experience the highest employment growth to 2025 at 1.1% per year. This growth will come predominantly across the human health & social work and wholesale & retail trade sectors. Suzanne Robinson, Yorkshire and Humberside managing partner, said: “It is promising to see Yorkshire and the Humber’s economy proved so durable during the pandemic, supported by a combination of the region’s resilient manufacturing sector and robust growth in health-related services. “Looking ahead, the recent progress towards establishing one of the country’s first two carbon capture utilisation and storage (CCUS) developments here in the region establishes a path towards green economic recovery and an increasingly dynamic future for the Yorkshire and Humber economy. “Across the country, action is needed to ensure the recovery is balanced. It’s important other parts of the country are not be left behind London once again, and steps are taken to combat inequality – both between regions and within them.” COVID-19 squeezes regional inequality – but only temporarily The COVID-19 pandemic has helped to narrow the UK’s regional economic divide, but the gap between London and the rest of the country is set to grow again during the post-pandemic recovery, the report finds. When measured by Gross Value Added (GVA), London’s economic activity dipped 3.6% from 2019 to 2021, compared to a slightly smaller 3% average decline for all UK regions. But, between 2021 and 2025, London’s GVA is forecast to grow by 3.1% per year compared to annual average growth of 2.8% across the UK. Only the East Midlands and South West are currently expected to gain any ground on London over the next three years compared to their pre-pandemic performance – although the capital is on course to pull ahead again after 2025. London’s forecasted dominance is even more apparent in the labour market, with the capital one of just four UK regions (out of 12) expected to see its working age population grow – by 4.7% – between 2021 and 2025. London is predicted to regain or exceed its pre-pandemic share of UK employment (30.9%) and GVA (39.1%) in 2025 too. Rohan Malik, EY’s UK&I managing partner markets & accounts, says: “The structural forces driving UK regional economic inequality are deep-rooted and are unlikely to be reversed overnight. Long-term ambitions and sustained, coordinated action are needed to balance growth across the country while ensuring that ‘levelling up’ isn’t simply moving activity elsewhere at London’s expense. The right actions now will bear fruit eventually, but policymakers need to be in this for the long haul. “Greater flexibility on where people work, aided by the pandemic, could help things. Focusing on what attracts people and businesses to a region, attracting the right mix of sectors and job opportunities, and tackling issues that affect quality of life will be key to taking advantage of this. Retaining young, aspirational talent matters: Manchester, for example, has one of the highest graduate retention rates of all UK cities – and it’s expected to be the UK’s fastest growing city between 2022 and 2025. “As previous EY research has shown, the UK’s Net Zero and levelling up ambitions go hand-in-hand: the billions of pounds of investment required to reach Net Zero present a golden opportunity to transform not only the environmental sustainability of the UK economy, but its regional balance too. The manufacturing and utilities sectors, for example, are key to the Net Zero agenda – and they are vital to regional economies.” East Midlands forecast to thrive, but the West Midlands recovery will be slower All English regions are expected to have regained their pre-pandemic level of GVA by the end of 2023, with only the West Midlands still below its pre-pandemic size by the end of 2022. Twenty per cent of areas in England recovered to their pre-pandemic GVA levels by the end of 2021 – the fastest to do so being digital and science-friendly Reading (where GVA is already 4% above its 2019 level); manufacturing-reliant Solihull (where GVA is still 9% below its 2019 level) is farthest from its 2019 performance. In a sign of the impact of the pandemic-driven acceleration of changes in the way consumers shop, Lichfield, despite its West Midlands location, is forecast to be England’s best-performing town between 2022 and 2025. From 2023, the town will be home to a new global fulfilment centre for an online retailer and is expected to see its GVA grow 3.6% per year. Across the UK, service and city centre activities are expected to be the fastest growing between 2022 and 2025, with accommodation and food service expected to improve its GVA by 8.6% per year, followed by other services (up 6.7%), administrative and support services (up 5.5%), and arts and entertainment (up 5.4%). The transportation and storage sector is expected to grow 3.8% per year. By contrast, manufacturing is one of the sectors expected to undershoot the overall annual UK GVA growth (2.8%), with 1.7% growth forecast.

Business confidence in Yorkshire rose 13 points during January to 48% – the highest of all UK regions and nations – according to the latest Business Barometer from Lloyds Bank. Companies in Yorkshire reported higher confidence in their own business prospects month-on-month, up 16 points to 42%. When taken alongside their optimism in the economy, up 12 points to 55%, this gives a headline confidence reading of 48%. The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. A net balance of 29% of businesses in the region expect to increase staff levels over the next year, down by eight points on last month. Overall UK business confidence remained steady in January, dropping just one point from December’s reading of 40% to 39%. Firms remained positive about their future trading prospects, despite a two-point dip month-on-month to 41%, and were optimistic about the economy overall, reporting a reading of 38%, up one point on December’s result. The net balance of businesses planning to create new jobs in the next twelve months decreased marginally by four points to 29%. Every UK nation and region maintained a positive overall confidence reading in January, with four reporting a higher reading than last month. Along with Yorkshire, Scotland (up 13 points to 37%), the West Midlands (up nine points to 39%) and the South West (up eight points to 37%) all had stronger confidence readings month-on-month. Steve Harris, regional director for Yorkshire at Lloyds Bank Commercial Banking, said: “These figures mark a fantastic start to the new year for Yorkshire firms. Despite ongoing inflationary challenges, coupled with market expectations, there are clear signs firms are confident about what coming months will bring. “The resilience SMEs have shown throughout the pandemic has put them on positive footing. While there will inevitably be bumps on the road ahead as the UK continues its recovery, these latest findings give us cautious optimism that investment and growth will be defining features of the year ahead.” Industry sector performance was mixed during January with confidence among manufacturers increasing by three points to 43%, reaching its highest level for three months due to an easing of supply chain pressures. Retail confidence also rose (up one point to 44%) while confidence among firms in IT/communications remains particularly strong at 72%. The impact of Omicron over the festive period meant the service sector extended its recent run of modest decreases in January, dropping one point to 38%. Positively, hospitality has recovered some of December’s decline, rising from 6% to 38%. Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: ““January’s survey shows a continued resilience with minimal fluctuation as economic optimism remains at a historically strong level. “A larger decline in confidence was potentially prevented by the reduction in Covid infection rates from early January and the prospects of the easing of restrictions across the UK. “However, businesses remain cautious about the pandemic and are facing into challenges from rising cost pressures although many are raising their prices in response.”

Knights, one of the UK’s fastest growing legal and professional services businesses, today announces that it has agreed to acquire Langleys Solicitors LLP (“Langleys”), a leading independent law firm in York and Lincoln. Acquisition rationale and background Langleys, established in 1890, brings a further 72 fee earners to Knights, significantly strengthening the Group’s presence in York. The acquisition will also allow the Group to further expand its operations in the East of England by providing entry into Lincoln, an attractive growth market for legal and professional services. The acquisition of Langleys is in line with the Group’s strategy to accelerate its organic growth through carefully targeted acquisitions which are a strong cultural fit, with the firm’s real estate and corporate offerings being closely aligned with Knights’ existing services. Langleys has particular strength in private wealth, where there is significant growth potential. Langleys also operates a legal aid child law (CL) business within Langleys LLP and a volume residential conveyancing business through a subsidiary, Home Property Lawyers Limited (HPL), which have 5 and 64 fee earners respectively. These businesses are included in the transaction perimeter but are non-core to Knights and as such the strategic options for them will be reviewed. In its unaudited accounts for the year ended 31 March 2021, Langleys reported revenue of c£14m with a corporatised PBT margin of c5%. Approximately two thirds of revenue is in respect of the core Langleys business (excluding the HPL and CL businesses). Following full integration and realisation of all synergies, the Board expects the core business to contribute a PBT margin of c20% which, combined with a typical level of revenue churn post-acquisition, means the acquisition is expected to be immediately earnings enhancing. Terms of the acquisition Under the terms of the acquisition, Knights will acquire Langleys from its four existing equity partners (“the Sellers”) on a debt free, cash free basis for a total consideration of £11.5m subject to working capital adjustments at the time of completion. This comprises an initial consideration of £8m, made up of £5.25m in cash and £2.75m in 704,515 new ordinary shares in Knights, (the “Consideration Shares”), along with deferred cash consideration of £3.5m to be paid in equal instalments over the three years following completion. The cash consideration will be satisfied from Knights’ existing facilities. Completion is expected to take place on 25 March 2022. Commenting on the acquisition, David Beech, CEO of Knights, said: “We are delighted to announce the acquisition of Langleys, a leading firm that has a strong cultural fit with Knights and expertise closely aligned with our existing services. The acquisition sees us become the leading law firm in York and provides a strong base for organic growth in the East of England through Lincoln, as we continue to strengthen our position as the leading legal and professional service business outside of London.” Tim Cross, Partner, Langleys commented: “Having built a strong reputation over a number of years, now is the right time to join Knights, whose growth journey we have followed in York and elsewhere across the regions. We believe Knights’ scale, ambition and ability to invest will enable us to unlock