From recovery to growth?An economic overview

Alan Cole

Hampshire County Council

Research & Intelligence

“To ensure a strong and visible evidence base for decision making in Hampshire”

How to predict the next global financial crisis

Looking back, it was easy to see that the crash was coming.

There had been too much cheap money. Debt had exploded. Speculation was rife. The gap between rich and poor had widened. Welfare spending had risen.

The financial system was so stretched that even a modest tightening of policy was enough to make it impossible for over-borrowed debtors to service their debts.

• The USA in 2007?

• Imperial Rome during the reign of Tiberius in AD33

GDP, jobs and productivity

• GDP still below the 2007 peak• Relatively strong growth in employment• Productivity still lags behind but projected to recover

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2008 2010 2012 2014 2016

GDPEmploymentProductivity

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ex

(20

07

=1

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)

Source: ONS, OBR 2014

FORECAST

Labour market (April statistics)

• Employment up• Unemployment down• Vacancies up• And average earnings

creeping ahead of CPI inflation (but not RPI/housing costs)

• UK economic upswing heavily dependent on households

• Consumer spending likely to continue to sustain the upturn

• But recovery becoming better balanced? Source: EY ITEM Club

A better balanced recovery?

Contributions to GDP Growth

Source: EY ITEM Club

• Boost in real wages and jobs will sustain consumer spending

• But business investment now also kicking in – high levels of corporate cash and growing confidence

• More tentatively, exports strengthening as overseas markets recover

Hampshire economic change (GVA)

Source: Experian• Hampshire GVA data relatively volatile, but generally follows national trend

• Tracks very slightly above UK average, in a very smooth future(!), but 2.5% not 3.5%

Hampshire economic change (Jobs)

Source: Experian• Hampshire employment data better quality, again following national and regional trends

• Expected to track just above national average in the forecasts, but under 1.0% not over 1.0%

Productivity the key to growth

• Hampshire productivity improving over last decade (recent dip)

• From just below UK average to approaching SE

• Just as important in the future, locally as well as nationally

Source: ONS£ output per hour worked(current prices)

Four LEPs

• The future not like the past (except for Coast to Capital)

• Solent not yet recovered from recession, still showing negative growth

• Pecking order for future growth unchanged (except for Coast to Capital)

Source: Experian

Diversity within HampshireProductivity factors – skills and earnings

NVQ4+ Average weekly earnings (f/t)

Diversity within HampshireProductivity factors – businesses

Business start-ups (per 10,000 adult pop)Knowledge intensive businesses (per 10,000 adult population)

Diversity- sector differences

Standard “Broad Industrial Sectors”

LEPs and others have locally defined key sectorsEg Marine, Pharma/Bio

Source: ONS

Local Authority differentialsUK Competitiveness Index 2013

• Central Hampshire LAs in top 3 places

• Fareham similar to a North Hampshire LAs (and a major mover)

• Older urban areas of South Hampshire in bottom 5 places

• BUT Southampton 4th highest city in UK for Good Growth (PwC)

Rank 2010

Rank 2013

Change in Rank

Winchester 29 26 3

Test Valley 53 35 18

East Hampshire 76 42 34

Hart 41 44 -3

Basingstoke and Deane 60 56 4

Fareham 174 75 99

Rushmoor 47 87 -40

New Forest 175 117 58

Eastleigh 85 142 -57

Portsmouth 205 158 47

Havant 206 167 39

Southampton 249 195 54

Gosport 281 375 -94

Source: Huggins and Thompson, Cardiff University

From recovery to growth?

• Recovery from financial crises is long and difficult • National debt burden is still substantial• But recovery becoming established and better balanced,

signs of business investment (exports less apparent)• Productivity still lagging, but recent signs of improvement• Hampshire economy growing, GVA and jobs, but

productivity wobbling• North Hampshire – invest to sustain high performance• South Hampshire – more challenging, but great potential• Skills, businesses, key sectors

More information

• Hampshire Facts and Figures http://www3.hants.gov.uk/planning/factsandfigures

• Particularly the Economy pages• Hampshire (interim) Hub

http://protohub.net/ • Or e-mail

alan.cole@hants.gov.uk

“To ensure a strong and visible evidence base for decision making in Hampshire”

Any questions?