East Midlands Economy: Are we all doomed? or reasons to be cheerful… Will Rossiter Economic Strategy Research Bureau EMC CPD Event, Melton Mowbray, October 2012

Overview The 2008 recession in historical perspective The impact of recession on the region A perfect storm – fiscal consolidation, the squeeze on real incomes and the Eurozone crisis Regional ‘fundamentals’ and long term competitiveness Where might the jobs and growth come from?

Quarterly Economic Growth in the UK since Q2 - 09Q2 5 quarters; 6.28% contraction 1990Q3 - 91Q3 5 quarters; 2.93% contraction 1980Q1 - 81Q1 5 quarters; 4.63% contraction 1975Q2 - 75Q3 2 quarters; 1.76% contraction Source: Based on data from Quarterly National Accounts, Table A2, (National Statistics) 2011Q4 - 12Q2 3 quarters; 1.03% contraction 1973Q3 - 74Q1 3 quarters; 3.25% contraction 1956Q1 - 56Q2 2 quarters; 0.31% contraction Average quarterly growth = 0.63% Equivalent to annual growth of 2.54%

Employment and Unemployment 4 Source: ONS Crown Copyright, ‘Annual Population Survey’, rolling quarterly estimates, January 2006-December 2006 to January 2010-December 2010.

Unemployment Between September 2007 and September 2011: –Nottingham went from 13 th highest to 8 th highest unemployment rate (out of 378 LADs/UAs); –Mansfield went from 90 th to 38 th highest and Erewash from 148 th to 72 nd ; and –Unemployment in D2N2 LEP increased by 3.4 pp, the 7 th highest increase out of 39 LEPs. Oxford, South Buckinghamshire, Cambridge, etc. experienced little increase in unemployment since the recession. 5 Source: ONS Crown Copyright, Model-Based Estimates of Unemployment, from NOMIS, 3 rd May, 2012

Real households' disposable income and actual income per head (constant prices) Source: The economic position of households, Q1 2012, ONS.

A perfect storm? Fiscal consolidation – taxes up, spending down… Squeeze on real incomes – taxes up and inflation up (although now moderated) Employment insecurity – households paying down debt Eurozone crisis – uncertain prospects Result – depressed demand – both domestic and international No amount of supply side tinkering is likely to correct this Must focus on regional ‘fundamentals’

The East Midlands… Reasons to be cheerful? “The East Midlands is a region of opportunity. Confidence in its future is founded on its generally diversified economic activity… its past and present level of employment, and the relative absence of the disadvantages associated with massive and congested conurbations.” East Midlands Economic Planning Council 1969 Historic strengths/sources of competitive advantage? Where can the jobs come from and what kinds of jobs will deliver the best outcomes for local communities? 8

9 East Midlands Spatial Economy

Rebalancing? Manufacturing Employment Source: ONS Crown Copyright, 2010 ‘Business Register and Employment Survey’. From NOMIS, 3 rd May, 2012

11 Productivity (East Midlands GVA per FTE, UK=100) Source: Experian Regional Planning Service, 2011

Source: ONS Crown Copyright, ‘Business Register and Employment Survey’. From NOMIS, 3 rd May, 2012 Contains Ordnance Survey data © Crown copyright and database right, Manufacturing Employment

Rebalancing? Public Sector Employment Less affected (as a region as a whole), due to other regions having major public sector concentrations (e.g. Sheffield) Public Sector Employment (PSE) fell from 20.1% to 19.2% of total employment in the East Midlands between Q and Q – loss of 15,000 jobs over the period Source: ONS Crown Copyright, Public Sector Employment, Quarter TSO: London. accessed/published 14 th March, Source: BIS, ABI Employee Job Estimates, 2008

High growth businesses in Nottingham Source: NESTA 2011

Further information Will Rossiter Economic Strategy Research Bureau Includes links to recent reports on D2N2 and Nottingham City emda archive