The South West economy did not suffer as badly as several other regions in the recession but it may also not rebound as quickly with implications for jobs, one of the region’s leading economists has warned.
The region tends to follow rather than to lead and its upturn is likely to be constrained, especially if there are severe government cutbacks in areas particularly important to the South West, writes Nigel Jump, Chief Economist at the South West RDA (Regional Development Agency) in the agency’s Quarterly Economics Review February 2010.
Nevertheless, he says the immediate South West outlook is for a slow recovery to get underway in 2010.
While regional surveys suggest that output in the South West stabilised and began to rise in the middle of last year, ahead of the UK overall, Mr Jump says: “Many South West companies still talk of weak demand, spare capacity and cost pressures on margins. As a result, job shedding, albeit at a slower rate than earlier, is more likely than new hiring.”
Mr Jump also notes that in the past quarter the South West output and employment readings have slipped below the UK average in the Purchasing Managers’ Index of regional economic activity.
“We did not fall as far as some regions in the recession but we are also not coming out of it as fast…This relative pattern might be expected but it remains a matter of some concern that the South West will be a follower rather than a leader in the recovery.”
“Once again, this highlights the structural, competitive weaknesses in the South West economy, such as low engagement or aspiration in developing knowledge-based sectors through investment in access, innovation and skills. There is still market failure, and therefore, development work to do in South West England,” he adds.
Elsewhere in the Review, Mr Jump sounds the alarm over the “astounding” rise in UK indebtedness over the past decade.
And in spite of last month’s return to growth in the broader UK economy, he says to “expect a period in the doldrums that does not feel much like a recovery”.
