Economics Demystified: South West Characteristics & Challenges

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Chief Economist Nigel Jump delivers a presentation on the characteristics of and the challenges posed by the South West Economy. This presentation looks at world economic conditions including relative growth rates, trade shares and looks at the impact of the UK recession to date.

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Economics Demystified: South West Characteristics & Challenges

  1. 1. www.southwestrda.org.uk Economics Demystified: SW characteristics & challenges October 2010 Nigel F Jump, Chief Economist Policy : do no harm World : ants & grasshoppers UK : 5 waves SW : rhymes
  2. 2. World conditions Ants & grasshoppers – the globalisation fable  Fundamental imbalances trade surpluses & deficits banking credit & debt flows  EU fiscal synchronisation v US alternative path  Insect crushers : climate & demographic change
  3. 3. World : relative growth -6 -4 -2 0 2 4 6 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 est 2010 est 2011 est RealGDP(%chfrompreviousyear) France Germany United Kingdom United States -10 -5 0 5 10 15 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 est 2009 est 2010 est 2011 est RealGDP(PercentChange) Brazil China India Russia
  4. 4. World: relative trade shares 0 2 4 6 8 10 12 14 16 18 20 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 est 2010 est 2011 est Sharesinworldimports(%) France Germany United Kingdom United States China Brazil Russia 0 2 4 6 8 10 12 14 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 est 2010 est 2011 est Sharesinworldexports(%) France Germany United Kingdom United States China Brazil Russia
  5. 5. UK recessions compared 92 94 96 98 100 102 104 106 Output 1980 Output 1990 Output 2008 92 94 96 98 100 102 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Number of quarters Workers 1980 Workers 1990 Workers 2008 Where next?
  6. 6. UK policy background “Fire of Enterprise”  Fuel - supply : output gap  Heat - demand : income rebalance  Oxygen - confidence : uncertainty & risk Policy : austerity & growth v austerity or growth CSR dampens the fire by cutting demand from a weak economy
  7. 7. History Rhymes 27.5 32.5 37.5 42.5 47.5 52.5 57.5 1968-69 1970-71 1972-73 1974-75 1976-77 1978-79 1980-81 1982-83 1984-85 1986-87 1988-89 1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11 2012-13 2014-15 PublicExpenditureas%ofGDP -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% RealGDPGrowth Real GDP Growth Public Expenditure % of GDP
  8. 8. UK: 5 waves flooding disposable/discretionary incomes Food and energy costs Credit access Asset values & returns Private recession – supply chains, jobs & wages of male manufacturers Public recession – procurement, taxes, jobs & wages of public services
  9. 9. SW relative performance Annual percentage change in total GVA 1998 to 2008 4.38 4.34 4.46 4.85 4.06 5.40 6.03 5.19 5.24 North East North West Yorkshire & the Humber East Midlands West Midlands East of England London South East South West Annual percentage change in GVA per head 1998 to 2008 3.98 3.75 3.57 3.80 3.40 4.17 4.62 3.96 4.02 North East North West Yorkshire & the Humber East Midlands West Midlands East of England London South East South West
  10. 10. SW relative performance GrossMedianFull-timeWeeklyEarnings(£) 0 100 200 300 400 500 600 700 North East North West Yorkshire & the Humber East Midlands West Midlands East of England London South East South West UK 1999 2009
  11. 11. ellipses not divides: GDHI
  12. 12. SW relative performance Employment rate (% of population aged 16-64) 58 60 62 64 66 68 70 72 74 76 78 NE NW YH EM WM E L SE SW WAL SCO NI % 2007 2008 2009 Unemployment rate (% of population aged 16-64) 0 1 2 3 4 5 6 7 8 9 10 NE NW YH EM WM E L SE SW WAL SCO NI % 2007 2008 2009
  13. 13. SW PMI: output & employment ratios PMI Output Index - Latest Month 35 40 45 50 55 60 65 Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May July Sep 2006 2007 2008 2009 2010 SW UK +/- balance PMI Employment Index - Latest Month 35 40 45 50 55 60 65 Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May July Sep 2006 2007 2008 2009 2010 SW UK +/- balance
  14. 14. SW claimant count: rates CCRate 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Dorset BANES Devon S. Gloucestershire NorthSomerset Wiltshire Somerset Cornwall Poole SouthWest Gloucestershire Bournemouth Bristol,Cityof Swindon Plymouth Torbay UnitedKingdom September 2009 September 2010
  15. 15. SW : history rhymes Characteristics  FT & PT employment & un-under-hidden employment  small business, part-time workers  northern wages with southern prices / costs  low investment & trade engagement, access & aspiration Challenges  dependence on domestic & government spending (C & G)  need to boost investment & trade (I & E) – HV products & services  rebalancing economy – HV v HJ sectors

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