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““Closing the Gap”Closing the Gap”Economic Context & OutlookEconomic Context & Outlook
South Gloucestershire Partners’ ConferenceSouth Gloucestershire Partners’ Conference77thth March 2014 March 2014
Nigel F JumpNigel F Jump
Executive Director & Chief Economist, Strategic Executive Director & Chief Economist, Strategic Economics LtdEconomics Ltd
www.strategiceconomics.co.uk [email protected] Visiting Professor in Economics, University of Bath & University Visiting Professor in Economics, University of Bath & University
of Plymouthof Plymouth
Global recovery underway …EZ area out of recession … but still restructuring
debtChina no longer slowing … but adjusting demand
& debtUS recovery underway … but facing ‘default’ &
‘tapering’
Still in downturn2013 UK Q4 Real GDP still 1.3% < 2008 Q1 peakDecember 2013 manufacturing still 9.1% < peak
Still many issuesgrowth versus debt … UK ratios no better by
2018+housing versus trade … barriers to rebalancing ‘fuzzy’ guidance … tapering, budget & elections
OBR Forecasts : December 2013
2013 2014 2015Growth (%ch yoy) 1.4 2.42.2
employment 1.4 1.0 0.3productivity 0.0 1.4 1.9
Inflation (%ch yoy) 2.8 2.62.3Unemployment (%) 7.9 7.67.1PSND/GDP (%) 73.9 75.5 78.3
Already wrong for 2013 … & 2014!2013: growth 1.9%, inflation 2.6%,
unemployment 7.6%growth borrowed? slow growth forever?
“Ultimately, productivity-driven growth in real earnings
is necessary to sustain the recovery.”
MPC unemployment target MPC unemployment target - scaring horses vs blowing - scaring horses vs blowing bubblesbubbles - difficult SW trend - difficult SW trend Blue UK
Red SW
hours, flexibility & composition hours, flexibility & composition part-time, public & flexible part-time, public & flexible
settlementssettlements
Sustained recovery needs productivity Sustained recovery needs productivity boost to raise real household income boost to raise real household income per head … per head … & that needs investment-led growth: & that needs investment-led growth: innovation, skills & market innovation, skills & market rebalancingrebalancing
SW consumer-led recovery looks realSW consumer-led recovery looks real
South Gloucs Economic Structure 2012 % Local vs UK
Agriculture, forestry & fishing 0.5 -0.2Production 19.5 +4.4
of which manufacturing 16.7 +6.3Construction 6.7 +0.3
Distrib, transport, accom & food 16.1 -2.1Finance & insurance 5.1 -3.5Business services 10.6 -1.1Information & communications 6.7 +0.2Real estate 11.5 +0.9
Public admin, education, health 20.9 +1.9Other servs & household activities 2.4 -1.0
Strengths & weaknesses ..– rebalancing supply against demand
structure?
South Gloucestershire: Issues … maintaining/building relative success… pulling up the relative laggards
“WoE w/o Bristol” – 2012 GVA £15bn £23,132 per head
relative UK index 108.6 +15.4pts since 1997
Business stock proportionately low (Eng Av) & lowest (WoE), lowest new firm formation, lowest self-employment, lowest skills ratio, highest employment rate & job density.
Claimant Count – January 2014No. % rate yoy ch
S Gloucs 2,610 1.5 -0.6WoE 16,102 2.3 -0.8SW 67,677 2.0 -0.7UK 1,242,912 3.0 -0.9
South Gloucestershire:
Drivers - Investment, Innovation, Skills, Entrepreneurship, Competitiveness
Rebalancing - Expenditure & sectors, Inward investment & exports, Finance &
government
Is South Gloucestershire ready for the marathon recovery?
weight - debt & dependencefitness - productivity (absolute & relative)stamina - real investment/incomes
Confidence - Aspiration, Access, Agglomeration & Action
who do you compare with … aim at?
the outlook Blue muddle through, OBR/long-term trend Red 90-00s aberration, permanent damage => next crisisGreen rebalancing is real … lost years worth it
Merge the 3 - whither Sth Glos?UK Real GDP Growth
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