SOUTHAMPTON is predicted to have the fastest-growing economy in the UK by the end of this year – but is set to lose its leading position in 2022.

Those are among the findings of a study which said the city was boosted by the move from traditional retailing to online shopping during the pandemic.

The UK Powerhouse study, produced for law firm Irwin Mitchel by the Centre for Economics and Business Research (Cebr), analyses 50 of the largest local economies by employment and economic growth.

Southampton’s economy is predicted to grow by 9.2 per cent in 2021, but by 2.8 per cent next year – taking it from first place to 18th.

The report says the dominance of the transport and storage industries in Southampton led to a boost from the move to e-commerce, with shipping and courier services in demand. Exports to EU countries plummeted in January but there has been a recovery since, while imports from non-EU countries are at a higher level than last year.

Hannah Clipston, partner at Irwin Mitchell, said: “The UK’s economy has undergone significant change over the last two years and this report highlights that the recovery is unlikely to be linear or even uniform.”

The study also found the South East was among the top regions for innovation, but that only a quarter of firms were innovating in response to environmental concerns.

Ms Clipston added: “Businesses have been incredibly resilient over the last couple of years and have faced many disruptors including Covid, labour shortages, supply chain issues and high fuel costs.

“Our latest study recommends that irrespective of the sector they’re in, organisations should be adopting technology more quickly and adapting to the UK’s new status after Brexit.

“All of this will require a shift in approach and for innovation to be celebrated and nurtured more than it is currently. It’s vital that businesses are encouraged to follow this path and receive the right level of support in order to help them succeed.”

The report’s authors say official economic data is often out of date and does not provide a reliable snapshot of the UK’s local economies.

They use a range of indicators to estimate gross value added and employment for 50 chosen locations and forecast their performance for the year ahead.