Nigel Jump - SW economic prospects after "fiscal withdrawal"

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Presentation by Nigel Jump at South West Stakeholders meeting held on 9th November 2010.

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Nigel Jump - SW economic prospects after "fiscal withdrawal"

  1. 1. www.southwestrda.org.uk SW economic prospects after “fiscal withdrawal” Let’s hear it for the South West, Exeter, 9th November 2010 Nigel F Jump Chief Economist South West RDA
  2. 2. Introduction World economy: stumbling into 2011? - one leg trying to run, one in a liquidity-debt trap UK & SW economy : rebalancing - all together now Policy background : fiscal correction - sub-regional growth & CSR
  3. 3. UK recessions compared 92 94 96 98 100 102 104 106 108 Quarters Output 1980 Output 1990 Output 2008, latest actual = q3 2010 = 10 92 94 96 98 100 102 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Number of quarters Quarters Workers 1980 Workers 1990 Workers 2008, latest = q2 2010 = 9
  4. 4. 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
  5. 5. CSR+: UK impacts ST: weaker growth, lower employment, higher inflation LT: Salt or Fresh water economics? CUTS: spending down from 47.5% to 41% GDP aggregate: £216bn spending + £102bn tax - over 4 fiscal years = 13% of “might have been” RGDP growth below trend for years = falling real incomes & rising unemployment Offsets – interest rates, £, rebalancing – I & X… strength?
  6. 6. CSR+ : SW jobs impacts updating after CSR but (OBR, PWC, RDA, CIPD)  gross jobs 490k direct => 600k public + 500k private => 1.6mn total  SW: 60k => 85k => 115k depending on how/when axe falls  12% => 14% => 10% of total  net ?? – anywhere from zero to two-thirds
  7. 7. SW : Businesses v Households  companies better off than people  domestic demand (Y&E)  procurement – crowding in or out?  interest & exchange rates  profitability, debt & liquidity  financial logjams : liquidity-debt trap  confidence on I & E & X? = rebalancing?
  8. 8. SW : rebalancing story Characteristics  unemployment & under/hidden employment  small/micro business, part-time workers  northern wages with southern prices/costs  low investment & trade engagement - access & aspiration  dependence on domestic demand: private consumption & government Challenges  need for investment & exports - HV products & services v HJ sectors  all trying to be ants rather than grasshoppers  plus insect squashers - climate & demography & technology
  9. 9. LEPs Not covered 71% SW businesses (147k) 68% SW employees (1.65mn) Does it matter?
  10. 10. LEPs Not covered 71% SW businesses (147k) 68% SW employees (1.65mn) Does it matter?

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