North East heading for a bright future according to LEP Chief Economist Mauricio Armellini

North East Local Enterprise Partnership’s Chief Economist Mauricio Armellini says the North East has a bright economic future

Left to right: James Ramsbotham, chief executive, North East Chamber of Commerce, Dianne Sharp, regional director CBI and Mauricio Armellini, chief economist, North East LEP
Left to right: James Ramsbotham, chief executive, North East Chamber of Commerce, Dianne Sharp, regional director CBI and Mauricio Armellini, chief economist, North East LEP

In the last six months we have seen an emerging pattern. Figures for not only employment, but also economic output and labour productivity are going up to record levels. This is not a coincidence but a consequence of a significant and structural transformation of the North East economy.

In 2012, we asked Lord Andrew Adonis to lead an independent economic review of the North East economy, his findings were very clear – that the North East faced substantial challenges, but these were set against huge assets that through leadership, innovation and investment could be overcome.

The figures show that the challenges are now beginning to be met.

Through attracting significant public and private investment – including one of the largest allocations of European funding in the country and a new City Deal for Sunderland and South Tyneside - the economy is harnessing opportunities for growth.

And investment is not just focused on public sector funding. Recent announcements, such as Atom Bank, the first “digital only” bank’s decision to locate in the North East shows an increased confidence in the area and is testament to the area’s growing reputation as a great place to be an employer and an employee.

This can be seen in the growth of private sector businesses. Private sector jobs now make up almost four fifths of all employment in the region, a proportion which is steadily increasing and is now comparable to the UK total. 47,000 jobs were created last year – equivalent to seven new Nissan plants – and were almost exclusively in the private sector.

It is not just that we are creating more jobs though. A lot of these jobs are better jobs in that they are being created in higher value added activities.

This is represented through the productivity figures in which Gross Added Value (GVA) and hours worked grew by 14% between 2009 and 2012. No other region saw a greater increase.

High value added manufacturing explains a great part of this. In the last seven years labour productivity in manufacturing went up by almost 50% - among the highest in the country.

With investment by companies such as Hitachi, which is building a £82m factory at Newton Aycliffe to build high speed trains and creating over 900 jobs, and the new International Advanced Manufacturing Park which is to be built as part of the new City Deal and attract £295m of private sector investment, we can only anticipate that this will continue to rise.

Better, more productive jobs will help create sustainable growth for the North East economy. This is through higher wages with North East wages for low, medium and high earners catching up with the rest of the country, making it a great to be employed as well as be an employer.

It is also as more productive workers are helping private firms go further, with the North East being the only English region to have a consistently positive trade balance in the last three years.

Increased employment, economic output and labour productivity are not only attracting more investment but also more workers.

Labour market activity figures show that the number of people who are not employed or looking for work is at a record low. The fall in inactivity has been dramatic and unprecedented and means that at a time when employment is growing faster than anywhere else in the country we also have more people available for work.

But this isn’t the end of the story. The North East Local Enterprise Partnership is working to drive growth and investment.

We have already had great success in the North East Enterprise Zone, which is one of the most successful enterprise zones in the country, and have provided nearly £40m funding to local businesses through the North East Investment Fund.

Through the North East strategic economic plan, we will accelerate this growth even further. Proposals around business support and access to finance will continue the upward trend of private sector led growth, opening up more opportunities for new and existing businesses.

Investment in skills will make sure our current and future workforce meets the needs of the employers.

Through new transport schemes we will ensure we have the right infrastructure to support this growth and by leading the way in innovation we will build the North East’s global reputation as a place to invest and develop.

We can’t change where the North East economy is coming from, but we are shaping and changing where it is going, creating more and better jobs for the area.

To find out more about the work of the North East Local Enterprise partnership and how it is working to create more and better jobs for the North East read the economic plan and sign up for our enewsletter at


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