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East Midlands Economy: Are we all doomed?
or reasons to be cheerful…
Will Rossiter
Economic Strategy Research Bureau
EMC CPD Event, Melton Mowbray, October 2012
Overview
• The 2008 recession in historical perspective
• The impact of recession on the region
• A perfect storm – fiscal consolidation, the squeeze on real incomes and the Eurozone crisis
• Regional ‘fundamentals’ and long term competitiveness
• Where might the jobs and growth come from?
-3
-2
-1
0
1
2
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71
95
5 Q
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60
Q1
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65
Q1
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70
Q1
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75
Q1
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80
Q1
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85
Q1
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90
Q1
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Q1
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05
Q1
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Q1
Qu
art
erl
y %
ch
an
ge
Quarterly Economic Growth in the UK since 1955Quarterly Economic Growth in the UK since 1955
2008Q2 - 09Q25 quarters; 6.28% contraction
1990Q3 - 91Q35 quarters; 2.93% contraction
1980Q1 - 81Q15 quarters; 4.63% contraction
1975Q2 - 75Q3 2 quarters; 1.76% contraction
Source: Based on data from Quarterly National Accounts, Table A2, (National Statistics)
2011Q4 - 12Q2 3 quarters; 1.03% contraction
1973Q3 - 74Q1 3 quarters; 3.25% contraction
1956Q1 - 56Q22 quarters; 0.31% contraction
Average quarterly growth = 0.63%Equivalent to annual growth of 2.54%
Employment and Unemployment
4
Source: ONS Crown Copyright, ‘Annual Population Survey’, rolling quarterly estimates, January 2006-December 2006 to January 2010-December 2010.
Unemployment
• Between September 2007 and September 2011:– Nottingham went from 13th highest to 8th highest unemployment rate (out of
378 LADs/UAs);– Mansfield went from 90th to 38th highest and Erewash from 148th to 72nd; and – Unemployment in D2N2 LEP increased by 3.4 pp, the 7th highest increase out of
39 LEPs.
• Oxford, South Buckinghamshire, Cambridge, etc. experienced little increase in unemployment since the recession.
5
Source: ONS Crown Copyright, Model-Based Estimates of Unemployment, from NOMIS, 3rd May, 2012
Real households' disposable income and actual income per head (constant prices) 1997-2012
Source: The economic position of households, Q1 2012, ONS.
A perfect storm?
• Fiscal consolidation – taxes up, spending down…
• Squeeze on real incomes – taxes up and inflation up (although now moderated)
• Employment insecurity – households paying down debt
• Eurozone crisis – uncertain prospects
• Result – depressed demand – both domestic and international
• No amount of supply side tinkering is likely to correct this
• Must focus on regional ‘fundamentals’
The East Midlands… Reasons to be cheerful?
“The East Midlands is a region of opportunity. Confidence in its future is founded on its generally diversified economic activity… its past and present level of employment, and the relative absence of the disadvantages associated with massive and congested conurbations.”
East Midlands Economic Planning Council 1969
Historic strengths/sources of competitive advantage?
Where can the jobs come from and what kinds of jobs will deliver the best outcomes for local communities?
8
9
East Midlands Spatial Economy
Rebalancing? Manufacturing Employment
Source: ONS Crown Copyright, 2010 ‘Business Register and Employment Survey’. From NOMIS, 3rd May, 2012
11
Productivity (East Midlands GVA per FTE,
UK=100)
Source: Experian Regional Planning Service, 2011
Source: ONS Crown Copyright, 2010. ‘Business Register and Employment Survey’. From NOMIS, 3rd May, 2012Contains Ordnance Survey data © Crown copyright and database right, 2012.
Manufacturing Employment
Rebalancing? Public Sector Employment
• Less affected (as a region as a whole), due to other regions having major public sector concentrations (e.g. Sheffield)
• Public Sector Employment (PSE) fell from 20.1% to 19.2% of total employment in the East Midlands between Q4 2010 and Q4 2011 – loss of 15,000 jobs over the period
Source: ONS Crown Copyright, 2012. Public Sector Employment, Quarter 4 2011. TSO: London. accessed/published 14th March, 2012.
Source: BIS, ABI Employee Job Estimates, 2008
High growth businesses in Nottingham 2007-2010
14
Source: NESTA 2011
Further information
Will Rossiter
0115 8482875
Economic Strategy Research Bureau
http://www.ntu.ac.uk/nbs/business/specialist_centres/esrb.html
Includes links to recent reports on D2N2 and Nottingham City
emda archive
http://www.tinyurl.com/emdakb