28 June 2018
We’ve all heard of the north-south divide, but it seems when it comes to economic growth a gap is also emerging between the east and west, with the likes of Manchester and Bristol outperforming their eastern counterparts.
In fact, the Financial Times reports that since the financial crisis, the north-west and the West Midlands have been growing at twice the rate of the east[i], while average output per head, productivity and business confidence are all significantly higher to the west of the country.
So where does this leave the north-east – arguably the most geographically disadvantaged area when it comes to economic growth, looking at recent stats?
There are certainly some challenges ahead, but recent signs are that the region is approaching them with a typical northern grit and determination. We take a closer look at three of the key challenges facing the north-east economy and what is being done to overcome them.
While the current uncertainty surrounding Brexit is likely to impact all regions, the north-east could suffer disproportionately if solid trade deals aren’t negotiated. In 2016/17 the EU accounted for 59% of the region’s exports, a higher rate than the rest of England[ii]. And earlier this year a leaked government impact report revealed that the north-east would be worst affected by leaving the EU, regardless of what deal is reached.
The North East England Chamber of Commerce has been working closely with businesses in the north-east to help form Brexit contingency plans for every possible scenario. In particular it is hosting a number of educational training programmes to help businesses understand new customs processes and documentation so they can be prepared to widen their international trading circles moving forwards.
There is also an exciting proposal afoot to create ‘supercharged free ports’, which would give the north-east a much-needed post-Brexit boost while creating 26,000 jobs and adding as much as £1.5 billion to the economy. The ports would be aimed at boosting international trade and ensuring the UK can maximise global opportunities.
The north-east has long suffered from an ‘enterprise gap’, that is, the number of new businesses opening in the region is lagging behind other areas. In fact, figures from earlier this year show that the north-east has one of the lowest levels of private sector enterprises, with just 319 businesses per 10,000 adults compared to a national average of 517[iv]. It was also noted that fewer of these businesses scale up to become £1 million and £3 million turnover companies.
In a bid to attract more businesses to the region, the North East LEP is working closely with Invest North East England and DIT to promote the region and attract inward investors, while the North East Fund will provide £120 million of debt, equity loans and mezzanine funds to over 500 north-east businesses[v].
And, just last month, Barclays launched a new £500 million growth fund aimed at helping SMEs in the north of England to grow and provide more jobs. The fund will focus on particular sectors, with favourable terms for companies within manufacturing, transport and logistics – all areas of real growth potential for the north-east.
Many businesses within the north-east have long struggled to fill skills gaps, especially for senior or specialised roles, due to fewer people within the region having higher level qualifications. However, this is an area which has seen significant improvement in recent years. Since 2014 just two other regions have seen larger increases in the proportion of people with a qualification at Level 4 or above[vi].
There has also been a real focus on apprenticeships in the region, with 24,790 people starting one of the earn while you learn qualifications in 2016/17[vii].
Moving forwards the North East LEP is working with employers to understand what skills they need and to help them attract the right calibre of applicants, as well as linking up with universities to help encourage graduates to stay in the region.
Overcoming the challenges
While the north-east certainly has some challenges to overcome in the coming years, lots of work has already begun to address disparities with other regions.
Tech in particular has been cited as a strong growth area for the region, with Newcastle poised to become Britain’s fastest growing digital economy[viii]. The region’s strong transport links, across land, air and sea, are also critical to helping businesses forge global connections and develop new trading relationships to help sustain traditional manufacturing businesses.
Our regional office in Leeds, which covers the north-east and Yorkshire is perfectly poised to help brokers offer businesses the right insurance solutions to help see them through challenging times.
The team in Leeds has a grand total of 436 years' experience in the insurance industry with an average of 26 years and works closely with a select panel of brokers to offer bespoke solutions for specific trades. Working this way allows us to tailor our expertise and offer maximum support.
In particular, the team have a wide range of experience with manufacturers and wholesalers.
Find out more about our Commercial Combined product here.
Follow NIG on LinkedIn