Leeds is forecast to outpace the UK’s economic growth rate between 2025 and 2028, according to EY’s latest Regional Economic Forecast.

Measured by Gross Value Added (GVA), Leeds’ economy is expected to grow at an average annual rate of 1.7% over this period, compared to the UK’s 1.6%. Yorkshire and the Humber is projected to see a slightly slower annual GVA increase of 1.5%, while employment growth in the region is also expected to trail the national rate, averaging 0.6% annually compared to 0.7% for the UK.

Strong Growth in Leeds and North Yorkshire

Leeds is expected to see faster-than-average employment growth of 0.8% annually between 2025 and 2028. By 2028, its local economy is forecast to be over £2.5bn larger than in 2024, driven by the city’s tech and professional services sectors.

North Yorkshire is also set to outpace the UK in both GVA (1.7%) and employment (0.8%) growth, supported by a thriving technology sector and increased construction activity.

Tim West, EY’s Leeds Office Managing Partner, said: “Leeds’ economy is expected to outpace the overall UK growth rate over the next three years, which is a clear reflection of the city’s dynamic and resilient business community. Leeds’ concentration of knowledge-based sectors is expected to be a major asset in the coming years, with the city’s local tech and professional services sectors forecast to contribute significant economic growth and job opportunities. North Yorkshire is also expected to fare slightly better than the overall national averages for both economic and employment growth. This will be driven in part by the region’s growing technology sector, which is predicted to continue its upward trajectory, as well as increased activity in construction.

“The story across the broader Yorkshire and the Humber region is more mixed. Manufacturing has traditionally played a key role in the region, but businesses in the sector are facing elevated energy and labour costs, which is impacting margins. Looking ahead, Yorkshire and the Humber’s policymakers and businesses should continue prioritising the skills and capabilities needed to fuel the region’s high-growth sectors. Capitalising upon the region’s unique industrial strengths, as well as taking advantage of opportunities linked to emerging tech and the energy transition will also be key to ensuring Yorkshire and the Humber is an attractive destination for inward investment going forward.”

Manufacturing Remains Key Despite Employment Decline

Manufacturing, wholesale and retail trade, and real estate will continue to be the largest contributors to Yorkshire and the Humber’s GVA. Manufacturing alone is expected to account for 13% of regional GVA by 2028. However, manufacturing employment is forecast to decline by 1.7% annually due to rising costs.

The region’s fastest-growing sector is expected to be information and communication, with an average annual GVA increase of 2.7%. The electricity, gas and steam sector is also set for strong growth (2.5%), driven by increased investment in energy networks and renewables.

Construction, administrative and support services, and professional, scientific and technical industries are projected to see the fastest employment growth (1.5% annually) between 2025 and 2028.

Economic Outlook Across Yorkshire and the Humber

Sheffield, Wakefield, and the West Yorkshire Combined Authority area are expected to see annual GVA growth of 1.5%, in line with the regional average. Sheffield’s employment growth (0.7%) is expected to match the UK rate, while Wakefield (0.5%) and West Yorkshire Combined Authority (0.6%) are forecast to see slightly slower increases.

Barnsley and Doncaster are projected to see annual GVA growth of 1.4%, slightly below the regional and national averages. Doncaster’s employment growth (0.6%) is expected to match the regional figure, while Barnsley’s (0.5%) will be slightly slower.

York, Calderdale, Kingston-upon-Hull, Middlesbrough, and Bradford are all expected to see GVA growth of 1.3% annually. Employment growth in York (0.6%) is forecast to match the regional average, while Calderdale (0.5%), Middlesbrough (0.4%), and Bradford (0.4%) are set for slightly slower growth. Kingston-upon-Hull is projected to have the slowest employment growth in the region, at 0.2% annually.

Kirklees (1.2%) and Rotherham (1.1%) are expected to experience the region’s slowest economic growth. Employment growth is also forecast to be subdued, with Kirklees at 0.3% and Rotherham at 0.2% annually between 2025 and 2028.

National Economic Outlook

Despite current economic challenges, the UK’s growth outlook is expected to improve from 2025 due to falling inflation, rising wages, and lower interest rates. National annual GVA growth is projected to average 1.6% between 2025 and 2028.

London and the East of England are set to lead the UK’s economic growth (1.7%), while Scotland (1.4%) and the North East (1.3%) are forecast to see the slowest expansion. Employment growth is expected to remain subdued nationwide, averaging 0.7% annually.

Tech-driven sectors are likely to be the fastest-growing, with information and communication (2.6%) and professional, scientific and technical services (2.2%) leading the way. Construction is expected to see 2.1% annual GVA growth, while electricity, gas, and steam – reflecting investment in networks and renewables – is also set for strong growth (2.6%). Meanwhile, the UK’s mining and quarrying sector is forecast to decline by 1.8% annually due to the ongoing reduction in North Sea oil production.

Leeds’ strong performance within this broader context highlights the city’s resilience and economic momentum, reinforcing its position as a key driver of growth in Yorkshire and the Humber.