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Growth is out there despite poor North East showing in regional league table, says EY chief

The North East is the only UK region expected to suffer employment decline to 2020, according to a new report from EY.

EY’s annual UK Regional Economic Forecast predicts that employment is expected to fall by an average of 0.1% a year between 2017 and 2020, with the largest declines projected in the manufacturing and public administration sectors.

This is a result of ongoing public sector job cuts and the fact that growth in manufacturing output is unlikely to translate to employment growth at the same rate as technology is used to boost productivity, according to the report.

Nevertheless, the region is predicted to see average annual GVA growth of 1.2% between 2017 and 2020. Although this is still the lowest growth in the country and below the UK average of 1.8%, it is a considerable increase on the 0.9% expected for 2014 to 2017.

By comparison, Yorkshire and Humber and the North West are expected to experience GVA growth of 1.4% and 1.5% respectively a year in 2017 to 2020 and the UK average is predicted to be 1.5%

While the report’s findings indeed paint a worrying picture at first glance, Sandra Thompson - North East Senior Partner at EY - was quick to explain how the figures only tell part of the region’s story.

She commented: “What the statistics don’t show is that there are lots of hubs for exciting, dynamic activity coming online across this region and particularly in Newcastle – from the development of Science Central, which is to also be home to a new £50m National Innovation Centre, to the many start-up and entrepreneurial businesses setting up and investing in the region.”

Cities in the North East are performing better individually than the regional statistics suggest. Newcastle is holding steady - with employment growth of 0.4% expected in 2014 to 2017 and 2017 to 2020. Meanwhile, Teeside and Sunderland will see improvements in their employment statistics, having both been the worst performers between 2014 and 2017.

Teeside’s employment figures will continue to decline but at a reduced rate of -0.2% in to 2020 compared with -0.7% in 2014 to 2017. Sunderland, meanwhile will move from -0.6% between 2014 and 2017 to positive employment growth of 0.02% to 2020.

In terms of GVA, Newcastle can expect to see a very strong 2014 to 2017 performance of 2.9% growth, but this is expected to slow in the years to 2020 to around 1.7%.

Teeside and Sunderland, however, are forecast to see an uplift - from 0.9% to 1.1% and -0.02% to 1.6% respectively.

Sandra continued: “The city figures show that whilst our region doesn’t fare so well in the regional league tables, growth is there.

“Our cities –are clearly moving in the right direction, with Teeside Sunderland and Newcastle acting as important drivers for growth. Employment growth does remain an issue but I’m heartened by these GVA statistics which do show we are travelling in the right direction.

“The challenge now is to find a way to rebalance the economy within our region, so our smaller towns and areas surrounding the cities also see positive growth and development.

“The announcement in last month’s Budget that Tyne and Wear metro stock is to finally be replaced is huge news and a definite step in the right direction. The metro is a vital part of our local economy and investment in this infrastructure will make a massive difference to commuters’ daily lives. We are finally starting to get an infrastructure that works and connects our towns and cities.

“The North of Tyne devolution deal means that important decisions about what is best for the region, being made by those who live here, will help create a momentum that will lead to economic development, business growth and job creation in the North East.

“That could be the driver of some of the social changes we need to see happen in this region if the productivity figures are really going to change – but even the Metro feeds in to that – helping people get to their place of work.

“I’m very proud and excited about the fact that Newcastle will be hosting the Great Exhibition of the North next year. It will be the largest event in England in 2018, showcasing the best of the North from our industrial heritage into the digital age.

“It will also firmly put the spotlight on this city and the economic benefits from hosting such an event should not be underestimated - both its immediate impact and the afterglow.

“I know that business across the whole region will get behind this event to maximize its potential for the three months it is on and for many years after.

“My hope is that it will be a catalyst for inward investment and a brilliant advert as to the benefits this city can offer as a place to live and work.”