Business leaders' briefing

1. Business Leaders’ Briefing
29 September 2014

2. Sarah Stewart
Chief Executive, NewcastleGateshead Initiative

3. Karen Matthew
Managing Director, John Lewis, Newcastle

4. Welcome and introduction
Sarah Stewart, Chief Executive, NewcastleGateshead
Initiative

5. Gold partners

6. Have the green shoots of economic
recovery reached the North East?
• Neil Saunders, Chief Executive, Conlumino.
• Tom Warburton, Director of Investment & Development, Newcastle City Council.
• Panel Q&A chaired by Paul Callaghan.
– with Dianne Sharp, Regional Director, CBI & Chris Milne, Chief Economist, NELEP.
• Chair’s summary.

7. Neil Saunders
Chief Executive, Conlumino

8. CONLUMINO
RETAIL AND THE
RECOVERY
CONLUMINO CONSUMER SENTIMENT TRACKER JULY 2014 PAGE 8

9. CONFIDENCE IS FRAGILE
HOW DO YOU EXPECT THE ECONOMY TO CHANGE OVER THE NEXT SIX
MONTHS?
INDEX, BETTER MINUS WORSE
-45.0 -43.9 -43.1
-28.0 -26.0
-28.8
-6.0 -7.3 -9.2
-3.5
-6.3
-2.0
7.1
0.7 1.4 2.6 3.3
-0.6
13.2
0.1
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14

10. REGIONAL CONFIDENCE
ECONOMY CHANGE OVER NEXT SIX MONTHS
INDEX
REGION INDEX THIS YEAR
UK national -1.8
South East 7.8
London 7.5
West Midlands 6.7
East Midlands 3.2
Northern Ireland -0.1
East Anglia -1.7
North West -3.7
South West -4.6
Wales -8.2
Yorkshire & Humberside -8.7
North East -15.8
Scotland -16.0

11. INCOME GROWTH IS WEAK
DISPOSABLE INCOME GROWTH
YEAR-ON-YEAR PERCENTAGE GROWTH
1.1 1.2
-0.8
-1.1
-0.7
-0.2
0.1
0.6
1.1
0.9
1.1
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

12. RETAIL IS IN GROWTH
4.1 3.9
3.2
2.6
1.6
1.0 0.8 0.4
-0.5
-8.0
Health,
beauty
Food &
Grocery
Clothing Total Homewares Furniture,
flooring
Electricals DIY &
Gardening
Other Home Ent
RETAIL SPENDING GROWTH RATES FOR 2014
PERCENT

13. RETAIL IS IN GROWTH
RETAIL SPENDING GROWTH RATES FOR 2014 BY REGION
PERCENT
3.6
2.9
2.7 2.6 2.6
2.1
1.8 1.8 1.8 1.7
1.5 1.4
1.2
London South
East
East
Anglia
South
West
UK Yorkshire West
Midlands
Scotland East
Midlands
Wales North
West
Northern
Ireland
North
East

14. RETAIL GROWTH TRENDS
RETAIL SPENDING GROWTH RATES OVER PERIODS
AVERAGE ANNUAL PERCENTAGE
7.0% 4.5% 1.9% ?
1983-1992 1993-2002 2003-2012 2013-2022

15. GOLDEN DRIVERS OF GROWTH
Easy credit and
low(ish) debt
Stable and low
interest rates
Rapidly rising house
prices
Stable
economy
Easy to live beyond
income growth
Low mortgage
repayments
Mortgage equity
withdrawal
Solid consumer
sentiment

16. ARE NOW TARNISHED
Easy credit and
low(ish) debt
Stable and low
interest rates
Rapidly rising house
prices
Stable
economy
Easy to live beyond
income growth
Low mortgage
repayments
Mortgage equity
withdrawal
Solid consumer
sentiment
High debt
Low, but rising
Slowly rising
house prices
Improving but
uncertain
outlook
Living within means
Higher mortgage
Repaying mortgage
debt
Soft and choppy

17. INTEREST RATES
WHAT CONSUMERS THINK WILL HAPPEN TO RATES OVER SIX MONTHS
PERCENT, 2013 TOP AND 2014 BOTTOM
RISE STABLE FALL
28.9%
66.1%
53.8%
44.1%
5.0%
2.1%

18. IMPACT OF RATE RISES
HOUSEHOLDS WITH OVER 30% OF DISPOSABLE INCOME ON REPAYMENTS
PERCENTAGE
7.7% 8.6% 10.2% 14.9%
RATES RISE TO
1.0%
RATES STAY AT
0.5%
RATES RISE TO
1.5%
RATES RISE TO
2.0%

19. RETAIL GROWTH TRENDS
RETAIL SPENDING GROWTH RATES OVER PERIODS
AVERAGE ANNUAL PERCENTAGE
7.0% 4.5% 1.9% 2.6%
1983-1992 1993-2002 2003-2012 2013-2022

20. RETAIL SPEND FORECAST
RETAIL SPENDING GROWTH
PERCENT
3.0
3.6
2.5
1.3
1.5
1.1
0.9
1.7
2.6
3.1
2.6
2.9
2.2
2.4
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

21. THE CHALLENGE FOR RETAIL
RETAIL IN 2013 WAS WORTH £316.7BN
INDULGENT
IMPORTANT
ESSENTIAL
54.1%
16.7%
29.2%

22. CONSEQUENCES
ECONOMY IMPROVING
COMPETITIVE FORCES STRONG
WINNERS AND LOSERS
DEMOCRATIC
INNOVATION AND INSPIRATION

23. CONLUMINO
Twitter: @neilretail
Email: neil@conlumino.com
CONLUMINO CONSUMER SENTIMENT TRACKER JULY 2014 PAGE 23

24. Tom Warburton
Director of Investment & Development, Newcastle City Council

25. Helping make Newcastle a
Working City

26. Overview of
North East LEP area

27. Number of
businesses in the
UK private sector
per 10,000 adults,
start of 2013
Taken from BIS
(https://www.gov.uk/government/uploads/sy
stem/uploads/attachment_data/file/254552/1
3-92-business-population-estimates-2013-
stats-release-4.pdf)

28. Our approach
• Supporting business and
enterprise
• An enabling infrastructure
• Investment for growth and jobs
• Employment and skills
• Working with others – partners
in city, NELEP, core cities,
OneNorth (transport investment)

29. Looking to the future
Maintaining pace with the
expected UK recovery over the
next four years, would point to
an increase in jobs in
Newcastle of about 6,000.
Source: Office for budget responsibility and NCC calculations

30. Accelerated
Development
Zone

31. Stimulating development

32. Not just city centre
• Investment in crane, quay, sites and
road
• Improving broadband across city,
including vouchers for superfast
• New jobs in Longbenton
• Tech sector – Campus North, Dynamo
• International promotion

33. Paul Callaghan
Chair, NewcastleGateshead Initiative

34. Panel Q&A session
• Neil Saunders, Chief Executive, Conlumino.
• Tom Warburton, Director of Investment & Development,
Newcastle City Council.
• Dianne Sharp, Regional Director, CBI.
• Chris Milne, Chief Economist, NELEP.

35. Summary
Paul Callaghan, Chair, NewcastleGateshead Initiative

36. Thank you

37. Business Leaders’ Briefing
29 September 2014