The Greater Manchester Forecasting Model

 

Robust and consistent information on the current and likely future performance of Greater Manchester, in terms of its economy, population and households, is a vital tool in the development of strategies and plans to accelerate the economic performance of the city region, for example through workforce development, business support and other strategic investment activities.

This intelligence also provides a key component in the development of future strategy in respect of spatial planning, transport infrastructure requirements and housing.

In April 2006 AGMA agreed to adopt the Greater Manchester Forecasting Model (GMFM) to fulfil these requirements.  Developed by Oxford Economics (OE), the GMFM provides integrated forecasts for GVA, population and households, based on and informed by forecasts of employment change.  The integrated nature of the economic and demographic forecasts produced by the GMFM is key to linking the different policy agendas in Greater Manchester.  The GMFM has been developed from and is fully integrated with the existing suite of world, UK and regional models developed by OE; a forecasting house with considerable international experience.

What is a forecasting model?

A forecasting model is a complex statistical tool that forecasts change, using analysis of past trends.  Primarily the value of a model is in highlighting likely future direction in the economic, demographic and housing environments, rather than making detailed predictions about the scale and nature of growth.

Forecasting models are based on a series of assumptions about how the real world functions.  These are based upon nationally validated datasets and observed relationships between different variables. 

Forecasting models do not necessarily tell you what will happen in the future; they assume the future will see the same sort of relationships between different economic and behavioural variables as in the past.  In other words, if the modellers can analyse what different driving forces have affected what has happened historically to a particular facet of the economy or market behaviour and how these driving forces have influenced it, then it is reasonable to assume that the same driving forces are likely to have a similar effect in the future. 

Of course, there are many unpredictable events, such as oil and gas price changes that cannot be foreseen which may have a considerable impact on an economy, and forecasting models cannot anticipate these events or the impact of them. These are commonly referred to as “external shocks”.  For these reasons forecasting models should be only one part of a research and intelligence toolkit in developing an understanding of the complex behaviours of local areas.

Forecasting models also have the capacity to run “what if” scenarios to “model” or assess the impact of changes in key variables, policy changes or specific interventions.  These are particularly valuable in developing strategies and making the case for a particular approach to policy or investment.  An Accelerated Growth Scenario (AGS) has been developed for Greater Manchester and is currently in the process of being updated.

For further information on the GMFM contact Rebecca Heron at r.heron@agma.gov.uk.

Related Files:

AGMA Policy and Research Unit, Wigan Investment Centre, Waterside Drive, Wigan, WN3 5BA
Tel: 01942 705725 Email: info@agma.gov.uk