South West set for muted economic recovery
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”.