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Local Economy - Resilient to Recession but risks ahead warns report

> News Release: Tuesday 29/03/2011, South West Observatory

> Contact: Andy Dunne, Communications Officer, 01823-447399
Economy Module
Whilst the South West economy has weathered recession relatively well, its future growth will be constrained by a combination of public-private sector rebalancing, reduced household spending and fragile business confidence. That’s the message from the South West Observatory’s recent update to itsState of the South West report in the week following the Chancellor’s Budget.

In its findings, the State of the South West 2011 highlights how, although the UK economy is now in recovery, it faces a number of constraints to growth including weak consumer and government spending, modest investment by business, and a less than hoped for increase in net exports. As the public sector recession takes hold in 2011, the question remains whether the private sector is ready, willing and able to fill the gap. In its spring 2011 Economic Projection, the Observatory’s Economy Module at the South West RDApoints to widespread concerns that the UK will struggle to achieve even modest growth during 2011.

For Chief Economist at the South West RDA / Observatory Economy Module Nigel Jump:

"Following on from last week's Coalition budget and the ongoing changes to regional structures, it is vital for actors across South West England to understand the many aspects of the region. The latest on-line update of the ‘State of the South West’ is part of the foundation we all need as we assess the way national economic policy, global events and local conditions are tending to dampen growth in the short term."

Key Economic Findings from the State of the South West 2011

  • Between 1998 and 2008, the South West has moved from below to above the England average (excluding London) in terms of its productivity (GVA per head).
  • The gap in economic performance between the best performing local areas – Swindon, Bristol, Bath and North East Somerset, South Gloucestershire, Bournemouth and Poole has closed.
  • Investment in Cornwall has raised its relative position but Torbay's position continues to deteriorate. 
  • The latest Regional Index of Sustainable Economic Wellbeing shows the region continuing to perform relatively well on this alternative measure of progress. The region is also relatively 'carbon efficient' meaning a relatively low amount of Carbon Dioxide is emitted for each unit of GVA generated.
  • Over time, the South West labour market has been characterised by high economic activity rates, high employment rates and low unemployment rates. Generally, the labour market showed a surprising degree of resilience through the recession – the claimant count rose by the joint lowest percentage of the English regions and is now falling. However, more public sector job losses will come in 2011.
  • Claimant rates rose higher in urban areas (e.g. Swindon, Bournemouth and Bristol) than the more rural areas (Devon, Dorset, Gloucestershire and Wiltshire) 
  • Claimant count for young males (20-24 yrs) is historically high and rose strongly in the recession.
  • Business Services and Financial services expected to be a strong source of future employment growth. For the latest on this, see the Projections and Growth Scenarios 2010-2030 paper.
> The South West Observatory is co-ordinated by a social enterprise that promotes evidence-based policy making. It is a data, research and intelligence network that covers themes including the economy, the environment, planning, public health, skills and learning, culture and society nationally, regionally and locally. It aims to equip policy-makers with up-to-date information to help their decision-making.

> The Economy Module is provided by the Economics and Evidence team at the South West RDA. For all recent economic projections see the Economy Module website – www.swo.org.uk/economy . To arrange an interview with Nigel Jump, please contact Andy Dunne via the above number.

> To access the complete State of the South West 2011 click on the link.

> Follow SWO on Twitter @SWObservatory