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.

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. ellipses
not
divides:
GDHI

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. 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. 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. 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