North tipped to ride economic wave

THE North East will be the only English region not to go into recession next year, according to reports from two groups of financial experts.

THE North East will be the only English region not to go into recession next year, according to reports from two groups of financial experts.

Despite thousands of job losses and a shrinking workforce, experts estimate the region’s economy will avoid entering negative growth during 2009.

Analysts at Oxford Economics have estimated that 17,000 workers will be made redundant in the North East during the year – one of the lowest rates in the country.

And planners at the Local Government Association have predicted that the region’s workforce will shrink by 70,000 as employers freeze recruitment to keep costs down.

The housing market will also continue to take a battering next year, with worst- case estimates showing a 10% fall in prices.

But even with these changes, most economists believe the North East has a relatively high proportion of industries that are likely to perform better than any other.

One North East board member Peter Jackson last night said the region had “some world-class companies that will help us see our way through very challenging times”.

The Castle Morpeth council boss warned against complacency during the year ahead, but suggested the North’s manufacturing and export business could actually recruit more staff if the value of the pound continued to fall.

Neil Foster, tasked with overseeing Durham County Council’s economy, said there was a feeling that some businesses could come out of a downturn in a stronger position.

Mr Foster said: “There are risks and people are cautious but we know there are some businesses, particularly those involved in the energy sector, which could do quite well next year.

“And I guess we are seeing the upside of the downside in that we may be more dependent on the public sector in the region, but that makes us a little immune to financial downturns.”

The North East fared averagely in the last two recessions and also performed better than any other region in the past two years.

As a result many are predicting the region, along with Wales, will just avoid recession next year.

In contrast, the economy in the North West is predicted to shrink by 0.4% while London will lose 187,500 jobs, with its economy shrinking 3.8%.

Hugh Morgan Williams, chairman of the Washington-based Canford group and a senior member of the CBI, said any job losses were bad news but welcomed the research indicating the region would outperform other parts of England.

He added that regional excellence in areas such as bio-science and renewable energy demonstrated why the North East might buck the trend economically.

One North East’s chief economist Paul Mooney said: “We’ve been saying for a long time that the North East’s economy is in a far stronger position to cope with the downturn than in the past. We have a much broader business base with sectors such as oil, gas, marine and defence continuing to perform well.”

The chemical industry in Teesside and the growing renewable energy sector are both predicted to have a healthy future.

Oil and gas companies, including Tyneside engineering company Wellstream, are also expected to see some growth in the year ahead. North East Minister Nick Brown said the number of people claiming jobseekers’ allowance was rising in the region but stressed the number of vacancies across skill requirements was keeping pace – unlike other areas where the labour market was loosening. He added: “The Government is determined to get ahead of the game – not get behind.”

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