The State of Britain

NE

Unemployment unchanged but the NE one of five UK regions to suffer a decrease in productivity

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A nowcast for the NE for the 12 months ended March 2021 which incorporates the second lockdown, published by the Economic Statistic Centre of Excellence (‘ESCoE’) on a rolling 4 quarter basis, has estimated that the NE economy contracted by 12.6%.

This ranked the NE eighth in the UK (previous ranking sixth). Over the same period the East Midlands was ‘best’ with a fall of 9.4%, with Wales’s 13.4% contraction the ‘worst’. The UK overall posted -11.8% on the same measure.

ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’) and has highlighted that during these unprecedented times, with differing lockdowns, there is no historical data that their model can use to fully understand how the pandemic will impact regional economies.

Consequently the partnership emphasises the uncertainties that exist with their nowcast at this time. This is the last nowcast that will be published by ESCoE with the ONS taking over the running of the model in the future.

ONS GDP to December 2020

Official ONS figures for an earlier period which reflect a mix of continued recovery from the first lockdown but also a slowdown from the second lockdown show the region’s performance relative to other parts of the UK.

The ONS’s figures for the quarter to December 2020 showed the NE post growth of 1.6% compared with 15.7% to September 2020.

This placed the NE third (previous ranking ninth) out of the twelve UK ‘regions’. London was top with quarterly growth of 3.1% whilst the East Midlands was bottom, posting growth of -0.8%. UK growth was 1%.

In this period, the NE’s best sector was transport at 9.3% whilst accommodation fell by 21.2. Production, Construction and Services were 5.4%, 1.8% and 0.6%.

Labour

Data from the ONS showed the Job Retention Scheme continued to mitigate unemployment across the UK. Unemployment in the region was unchanged at 75,000 between March and May 2021; which left the rate at 5.8%. At 6.5% London was the highest; Northern Ireland had the lowest rate of 3.6%, with the UK rate at 4.8%.

The South East had the highest employment rate at 77.7%, this compared with 70.3% in Northern Ireland and 72% in the NE where 1.2m are employed; the UK rate was 74.7%.

Public sector employment in the NE increased by 3% to 243,000 in the year to March 2021, which was 21% of the workforce. At 25.9% Northern Ireland had the highest level of public sector employment which compared to 14.8% in London which was the lowest.

Productivity

ONS figures also showed that in 2020, output per hour worked fell by 0.6% in the NE which ranked the region ninth out of the 12 UK ‘regions’. Productivity growth in 2019 was best in the North West, increasing by 4.6%, and fell the most in the West Midlands, decreasing by 1.4%. Output per hour worked in the UK increased by 0.4%.

Research and Development

The region attracted £0.7bn of R&D spend in 2019, similar to 2018. This ranked the NE twelfth in the UK (previously ranking eleventh). Over the same period the South East did best and secured £7.5bn of R&D expenditure.

Overall UK R&D spend rose by £1.3bn (3.4%) to £38.5bn in 2019 – the lowest percentage growth since 2013. Most R&D expenditure was in the business sector at £25.9bn (67% of the UK total), followed by the higher education sector at £9.1bn (24%).

Total R&D expenditure represented 1.74% of GDP in 2019; compared with 1.59% in 2008 and 1.72% in 2018. Overseas funding increased by 4.1% to £5.6bn in 2019 compared with 2018; this was 0.8% higher than the peak in 2014 of £5.5bn.

Housing

The NE’s average property price increased by 1.4% in May to £143,129. The uplift took the annual increase to 11.8%. In comparison, UK prices grew by 0.9% to £254,624, an annual growth rate of 10%.

The North East economy sluggish out of the first Lockdown

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Official ONS figures which reflect the economy opening up after the first lockdown show the region’s performance relative to other parts of the UK.

These stats compare GDP in the quarter ended September 2020 with the same quarter a year earlier. These showed that the NE’s growth was -9.5% compared with -22.1% the previous quarter. This placed the NE eleventh (previous ranking eighth) out of the twelve UK ‘regions’.

Northern Ireland topped the table with growth of -2.9% whilst UK growth over the same period was -7.5%. The West Midlands was bottom, posting growth of -11.3%.

In the same report, the ONS’s figures for the standalone quarter to September 2020 showed the NE post growth of 15.7% compared with -17.3% in April to June 2020.

This placed the NE ninth (previous ranking fourth) out of the twelve UK ‘regions’. The South West was top with quarterly growth of 19.9% whilst London was bottom, posting growth of 13.3%; UK growth was 16.9%.

In this period, the NE’s best sector was accommodation at 280% compared with finance at -2%. Production, Construction and Services were 18%, 28% and 14%.

Labour

Data from the ONS showed the Job Retention Scheme continued to mitigate unemployment across the UK. Unemployment in the region was down 13,000 at 70,000 between January and March; the drop of 1% took the rate to 5.4%. At 6.8% London was the highest; the South East had the lowest rate of 3.4%, with the UK rate at 4.8%.

The South East had the highest employment rate at 78.5%, this compared with 69.1% in Northern Ireland and 72.2% in the NE where 1.2m are employed; the UK rate was 75.2%.

Public sector employment in the NE increased by 1.4% to 239,000, which was 20.4% of the workforce. At 25.9% Northern Ireland had the highest level of public sector employment which compared to 14.5% in London which was the lowest.

In December, average earnings in the NE grew to £584 per week. London had the highest average earnings of £871 and the lowest average earnings were recorded in the North East and the East Midlands.

Earnings in Scotland increased the most in the UK by £37 per week whereas the biggest drop in wages was £50 in the East Midlands. The rate of annual pay growth was 4.0% for total pay and 4.6% for regular pay. In real terms, total pay is growing at a faster rate than inflation at 3.1%, with regular pay growth at 3.6%. Public sector pay grew at 5.6% compared with 3.7% in the private sector.

The public sector saw the highest estimated growth in total pay. All sectors saw positive growth, although construction (1.2%) and manufacturing (1.9%) had smaller growth than the other sectors. This is an improvement on the growth rates in April to June 2020, the three-month period with the biggest falls in average pay, when all sectors except for the public sector had negative growth rates.

Housing

The NE’s average property price increased by 3% in March 2021 to £145,893. The uplift took the annual increase to 13.7%. In comparison, UK prices grew by 1.8% to £256,405 during March, an annual growth rate of 10.2%.

The North East’s economy declines by 22.1% and over a five year period the region is the UK’s poorest performing

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A nowcast for the NE for the 12 months ended December 2020, published by the Economic Statistic Centre of Excellence (‘ESCoE’), has estimated that the NE economy contracted by 10.1%.

This ranked the NE fourth in the UK. Over the same period the East Midlands was ‘best’ with a fall of 8.9%, with London’s 12.9% contraction the ‘worst’.

ESCoE also gave estimates of regional growth over a longer period. Over the last five years, London, the East of England and the West Midlands have grown relative to the other parts of the UK despite experiencing some of the largest declines in activity in 2020.

At the bottom of the table, the North East of England is an outlier in terms of weak economic performance and the devolved administrations have also posted below average results.

ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’) and has highlighted that during these unprecedented times, with differing lockdowns, there is no historical data that their model can use to fully understand how the pandemic will impact regional economies. Consequently the partnership emphasises the uncertainties that exist with their nowcast at this time.

ONS GDP to June 2020

Official ONS figures for an earlier period which reflects the full effect of the first lockdown show the region’s performance relative to other parts of the UK.

These stats are for the period six months before ESCoE’s estimates shown above and compare GDP in the quarter ended June 2020 with the same quarter a year earlier. These showed that NE growth was -22.1% compared with -3.9% the previous quarter. This placed the NE eighth (previous ranking also eighth) out of the twelve UK ‘regions’.

London topped the table with growth of -16.3% whilst UK growth over the same period was -20.7%. The West Midlands was bottom, posting growth of -24.7%.

In the same report, the ONS’s figures for the standalone quarter to June 2020 showed the NE post growth of -17.5% compared with -2.7% in January to March 2020.

This placed the NE fourth (previous ranking sixth) out of the twelve UK ‘regions’. Northern Ireland was top with quarterly growth of -13.6% whilst the West Midlands was bottom, posting growth of -21%.

In this period, the NE’s best sector was public administration at -1.4% whilst accommodation fell by -75.9%. Production, Construction and Services were -18.4%, -33.3% and -15.8%.

Labour

Data from the ONS showed the Job Retention Scheme continued to mitigate unemployment across the UK. Unemployment in the region was 3,000 lower at 83,000 between October and December; the drop of 0.2% took the rate to 6.5%. At 7% London was the highest; Northern Ireland had the lowest rate of 3.6%, with the UK rate at 5.1%.

The South East had the highest employment rate at 78.6%, this compared with 69.4% in Northern Ireland and 71.2% in the NE where 1.2m are employed; the UK rate was 75%.

Public sector employment in the NE increased by 2.2% to 238,000, which was 20.3% of the workforce. At 25.3% Northern Ireland had the highest level of public sector employment which compared to 14.3% in London which was the lowest.

In December, average earnings in the NE increased to £555 per week. London had the highest average earnings of £862. The lowest average earnings were in North East.

Earnings in Wales increased the most in the UK by £44 per week whereas the biggest drop in wages was £27 in Yorkshire and the Humber. The rate of annual pay growth was 4.7% for total pay and 4.1% for regular pay. In real terms, total pay is growing at a faster rate than inflation at 3.8%, with regular pay growth at 3.3%.

The finance and business services sector saw the highest estimated growth in total pay, at 6.8%. All sectors saw positive growth, although construction (1.9%) and manufacturing (1.5%) had smaller growth than the other sectors. This is an improvement on the growth rates in April to June 2020, the three-month period with the biggest falls in average pay, when all these sectors except for the public sector had negative growth rates. Public sector pay growth is now 4.3%.

Housing

The NE’s average property price increased by 1.9% in December 2020 to £141,154. The uplift took the annual increase to 9.2%. In comparison, UK prices grew by 1.2% to £251,500 during September, an annual growth rate of 8.5%.

The NE economy falls by 16% following lockdown and unemployment hits 6.7%

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A nowcast for the NE for the 12 months ended September 2020 on a rolling 4 quarter basis, published by the Economic Statistic Centre of Excellence (‘ESCoE’), has estimated that the NE economy contracted by 6.5%.

This ranked the NE first in the UK and suggests the regional economy has so far coped ‘better’ with the pandemic relative to the other eleven UK ‘regions’ on this metric. Wales’s 11.4% contraction was the ‘worst’; the UK decline according to these figures was c8%.

However, the total percentage change in the NE’s GDP relative to the end of 2019 is about -16%. This compares with -8% across the UK.

ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’) and has highlighted that during these unprecedented times, there is no historical data that their model can use to fully understand how the pandemic will impact regional economies. Consequently the partnership emphasises the uncertainties that exist with their nowcast at this time.

ONS GDP to March 2020

Official ONS figures for an earlier period which reflects the start of the Covid 19 turmoil show the region’s performance relative to other parts of the UK.

These stats are for the period six months before ESCoE’s estimates shown above and compare GDP in the quarter ended March 2020 with the same quarter a year earlier. These showed that NE growth was -3.9% compared with -0.7% the previous quarter. This placed the NE eighth (previous ranking tenth) out of the twelve UK ‘regions’.

London topped the table with growth of 1.5% whilst UK growth over the same period was -2.2%. The West Midlands was the worst performer and grew by -5.3%. London was the only region to show positive growth.

In the same report, the ONS’s figures for the standalone quarter to March 2020 showed the NE post growth of -2.7% compared with -1.3% in October to December 2019.

This placed the NE sixth (previous ranking twelfth) out of the twelve UK ‘regions. No region showed positive growth. London was top with quarterly growth of -1.5% whilst Northern Ireland was bottom, posting growth of -4.5%.

In this period, the NE’s best sector was water supply with growth of 3.7% but arts fell by 11.4%. Production, Construction and Services fell by 3.4%, 1.1% and 2.7%.

Labour

Data from the ONS showed the Job Retention Scheme continued to depress unemployment across the UK. Unemployment in the region was 15,000 higher at 88,000 between July and September; the uplift of 1.2% took the rate to 6.7%. At 6.7% the North East was the highest; Northern Ireland had the lowest rate of 3.6%, with the UK rate at 4.8%.

The South East had the highest employment rate at 78.3%, this compared with 70.5% in Northern Ireland and 71.5% in the NE where 1.2m are employed; the UK rate was 75.3%.

Housing

The NE’s average property price increased by 2.8% in September 2020 to £136,262. The uplift took the annual increase to 3.3%. In comparison, UK prices grew by 1.7% to £244,513 during September, an annual growth rate of 4.7%.

The North East economy shrinks by 6.3% following lockdown and pre-pandemic data also shows an earlier Brexit contraction with all key sectors declining

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A nowcast for the NE for the 12 months ended June 2020 on a rolling 4 quarter basis, published by the Economic Statistic Centre of Excellence (‘ESCoE’), has estimated that the NE economy contracted by 6.3%.

This ranked the NE eighth in the UK and suggests the regional economy has so far coped ‘poorly’ with the pandemic relative to the other eleven UK ‘regions’. Over the same period the East Midlands was ‘best’ with a fall of 4.5%, with London’s 7.4% contraction the ‘worst’; the UK decline according to the Office for National Statistics (‘ONS’) figures was 5.3%.

ESCoE is a partnership of research institutions and the ONS and has highlighted that during these unprecedented times, there is no historical data that their model can use to fully understand how the pandemic will impact regional economies. Consequently the partnership emphasises the uncertainties that exist with their nowcast at this time.

ONS GDP to December 2019

Official ONS figures for an earlier period which reflects Brexit uncertainty rather than Covid 19 turmoil, show the region dropping places relative to other parts of the UK. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its fifth estimate for the NE, the other eight English regions, and Wales.  GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before ESCoE’s estimates shown above and compare GDP in the quarter ended December 2019 with the same quarter a year earlier. These showed the NE contracted by 0.7%, a deterioration on +1.5% the previous quarter. This placed the NE tenth (previous ranking fourth) out of the twelve UK ‘regions’.

London topped the table with growth of 5% whilst UK growth over the same period was 0.9%. The West Midlands was again the worst performer and contracted by 2.7%. The North East, Wales, East Midlands and the North West were the other ‘regions’ in the UK to suffer a decline.

In the same report, the ONS’s figures highlighted that the standalone quarter to December 2019 also showed a much worsening picture in the NE with the data far poorer than the previous quarter. The NE economy fell by 1.3% in October to December 2019, following +1.6% in July to September 2019.

This placed the NE twelfth (previous ranking first) out of the twelve UK ‘regions. The NE was one of seven regions of the UK that saw their economies contract but overall the UK growth was flat.

The SW was top with quarterly growth of 0.8% whilst the North East was bottom.

In this period, the NE’s best sector was electricity, gas, steam and air with growth of 4.6% but information and communication fell by 13.9%. Overall all key sectors contracted, production was -1.8% construction -2.1%, services -1.1% and agriculture -1.1%.

Labour

Data from the ONS showed the Job Retention Scheme continued to depress unemployment across the UK. Unemployment in the region was 2,000 lower at 68,000 between April and June; the drop of 0.2% took the rate to 5.2%. At 5.2% the North East was the highest; Northern Ireland had the lowest rate of 2.5%, with the UK rate at 3.9%.

The South East had the highest employment rate at 79.7%, this compared with 71.7% in Northern Ireland and 74.3% in the NE where 1.2m are employed; the UK rate was 76.4%.

Housing

The NE’s average property price fell by 2.4% in April 2020 to £125.938. The drop took the annual fall to 2.3%. In comparison, UK prices dropped by 0.2% to £234,612 during April, an annual growth rate of 2.6%.

The ONS data is based on completed housing transactions. Typically, a house purchase can take 6 to 8 weeks to reach completion so the price data in the April figures will therefore reflect those completions that occurred before lockdown.

This is the first publication of the UK HPI since it was suspended in May 2020. The UK Property Transactions Statistics for April 2020 showed that that between March 2020 and April 2020, transactions decreased by 55.5%.

NE steel and coal production issues, a big hike in regional wages but incomes the lowest in the UK

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State owned Teesside Airport may host drive-in gigs for some major music concerts, promoter Live Nation has announced. The Streets, Dizzee Rascal and Sigala are among those due to perform over the summer. The 300-car gigs have been designed to provide a safe alternative to the events that have been cancelled.

In industry, British Steel is pausing production at Skinningrove for three weeks for a second time this year. The company confirmed 300 workers would be furloughed at the Teeside site as a temporary measure.

In County Durham, Banks Group’s plans to enlarge its Bradley West mine to extract an extra 90,000 tonnes of coal have been rejected by councillors.

Extraction of coal began in May 2018 and the project had been recommended by planning officers.

Banks, which had promised to restore the land by August 2021, said the extension would protect jobs on the site and support British industry by providing an alternative to imported coal from America, Russia or Australia.

The Stats

This month the ONS published regional household disposal income figures for 2018. Total gross disposable household income (GDHI) in the UK in 2018 was £1.4bn. Of that, 86.3% was in England, 7.6% was in Scotland, 3.8% was in Wales and 2.3% was in Northern Ireland.

The average UK income per head after direct and indirect taxes were taken off was £21,109.  England was the only country above the UK average at £21,609 but growth in incomes was best in Scotland and Northern Ireland at 5.1% and 4.7%. England’s growth was the same as the UK at 4.6%; Wales grew by 4.4%.

At a regional level, London had the highest GDHI per head where, on average, each person had £29,362 available to spend or save; the North East had the lowest at £16,995 which compares with the UK average of £21,109.

At a local level, Kensington and Chelsea/Hammersmith and Fulham district had the highest GDHI per head at £63,286 with Nottingham the lowest at £13,138. All the top 10 local areas were in London or the South East with the bottom 10 within the North West, Yorkshire and The Humber, East Midlands, West Midlands, and Northern Ireland regions.

The wealthiest part of the North East was Northumberland with incomes of £20,437. This ranked the area 70th out of 179 districts of the UK. The poorest area of the region was South Teesside at £15,764, just beating Sunderland at £16,000. South Teesside was ranked 164th in the UK, Nottingham and Leicester were bottom.

In terms of regional growth, the largest increase was in London at 5.2% with the smallest in the East Midlands at 3.6%. NE growth was 3.9%.

At the local level, Kensington & Chelsea and Hammersmith & Fulham was best again in the UK with growth of 7.6% whereas Luton was the worst and only grew by 0.9%.

In the NE, income growth in Northumberland was top at 4.8% with Hartlepool and Stockton-on-Tees second at 4.7%. South Teesside was again the worst regional performer with growth of 1.4%, a ranking of 176th.

Labour

More data from the ONS showed unemployment in the region was 11,000 lower at 68,000 between February and April; the big drop of 1.0% took the rate to 5.2%. Despite narrowing the gap with the West Midlands (4.8%), at 5.2% the North East was still the highest; Northern Ireland had the lowest rate of 2.3%, with the UK rate at 3.9%.

The South East had the highest employment rate at 79.5% which compared with 73.9% in the NE where 1.2m are employed; the UK rate was 76.4%.

Public sector employment in the NE increased by 2.7% in March to 236,000, which was 19.2% of the workforce. At 25.2% Northern Ireland had the highest level of public sector employment which compared to 13.9% in London which was the lowest.

In March, average earnings in the NE increased by £60 to £590 per week. London had the highest average earnings of £847 and the lowest average earnings of £537 were recorded in Northern Ireland.

Earnings in the NE increased the most in the UK by £60 per week whereas the biggest drop in wages was £37 in Scotland.

In the UK overall, average earnings grew by 1.7% or by 0.4% after inflation. If bonuses are included real pay fell by 0.4%.

The public sector saw the highest estimated growth, at 3.2% for regular pay, while negative growth was seen in the construction sector, estimated at negative 1.8%. Both the wholesaling, retailing, hotels and restaurants sector and the manufacturing sector saw very weak growth at 0.1% for regular pay.

Housing

Estimates of private sector rents for the year to March 2020 were published by the ONS this month.

The median monthly rent was an all time high of £700 in England between 1 April 2019 and 31 March 2020. London had the highest median monthly rent at £1,425 with the North East the lowest at £495. Within local authorities the difference in monthly rental price between the most and least expensive was nearly £2,100.

In the NE rental prices ranged from £425 to £595 with £495 the median.

Data for the 12 months to May 2020 showed private rental prices paid by tenants in the UK rose by 1.5%, unchanged from the previous month. Rental prices grew by 1.5% in England, 1.2% in Wales and 0.6% in Scotland.

Rental prices increased the most in the South West, up by 2.5%, with the lowest price growth in the North East at 0.8%, followed by the North West, which increased by 1.0%.

According to the ONS the South West is also projected to have the highest regional rate of growth in households over the next ten years, at 9%. This compares with 4.3% in the NE (the lowest).

Overall the number of households in England is projected to increase by 1.6m (7.1%) from 23.2m in 2018 to 24.8m in 2028. The NE is forecast to have 1.2m households by 2028.

Given the closure of the housing market following lockdown the ONS has suspended its property price index until further notice.

The North East economy shrinks more slowly than other regions at -1.5% and pre-pandemic data shows the region’s growth of 1.3% is second best in the UK, with a significant drop in unemployment

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A quarterly nowcast for the NE for the 3 months ended March 2020 which captures the start of lockdown, published by the Economic Statistic Centre of Excellence (‘ESCoE’), has estimated that the NE economy contracted by 1.5%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the NE joint third and suggests the NE economy has coped better with the pandemic relative to the other eleven ‘regions’ of the UK. Over the same period the 1% fall in the East Midlands was ‘best’ with Northern Ireland’s 3.9% contraction the ‘worst’; the UK decline was 2%.

For the 12 months ended March 2020 on a rolling 4 quarter basis, ESCoE has estimated that NE growth has dropped from 1.1% to 0.9%.

This ranked the NE sixth (previous ranking seventh) and suggests the region has marginally improved its position relative to the other eleven parts of the UK. Over the same period UK growth was 0.5%; growth in London (ranked first) was 1.8%; and growth in the East Midlands (ranked twelfth) was -0.6%. 

ONS GDP to September 2019

Official ONS figures for an earlier period which reflects Brexit uncertainty rather than Covid 19 turmoil are, relatively, better for the region. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its fourth estimate for the North East, the other eight English regions, and Wales.  GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before ESCoE’s estimates shown above and compare GDP in the quarter ended September 2019 with the same quarter a year earlier. These figures showed the NE grew by 1.5%, up from -0.1% the previous quarter. This placed the NE fourth (previous ranking ninth) out of the twelve UK ‘regions’.

London topped the table with growth of 5% whilst UK growth over the same period was 1.2%. The West Midlands was the worst performer and contracted by 1.5%, one of three ‘regions’ in the UK to suffer a decline.

In the same report, there was no surprise that the ONS’s figures also highlighted that the standalone quarter to September 2019 was also better for the NE than the previous quarter. The North East economy grew by 1.3% in July to September 2019, following a contraction of 0.9% in April to June 2019.

This placed the NE second (previous ranking tenth) out of the twelve UK ‘regions. Four regions of the UK saw their economies contract but overall the UK grew by 0.5%.

Again London was top with quarterly growth of 1.4% whilst the East Midlands was the worst performer and contracted by 0.3%.

In this period, the NE’s best performer was information/communications with growth of 14.5% but electricity/gas/steam/air fell by 5.8%. Overall construction grew by 10.2% and services by 1% but production fell by 0.8% and agriculture by 0.7%.

Labour

More largely pre-pandemic data from the ONS showed unemployment in the region was 8,000 lower at 70,000 between January and March; the drop of 0.7% took the rate to 5.4%, at 5% the West Midlands was next highest. Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.9%.

The South East had the highest employment rate at 80.2% which compared with 72.9% in the NE where 1.2m are employed; the UK rate was 76.6%.

Housing

The NE’s average property price decreased over the month by 0.6% to £126,945. The drop took the annual increase to 1.8%. In comparison, UK prices dropped by 0.2% to £231,855 during March, an annual growth rate of 2.1%.

The ONS data is based on completed housing transactions. Typically, a house purchase can take 6 to 8 weeks to reach completion so the price data feeding into the March figures will therefore reflect those completions that occurred before lockdown.

Given the closure of the housing market following lockdown the ONS has suspended its index until further notice.

NE exports increase, Tyneside imports the most services in the NE and the region’s unemployment rate remains a UK outlier, despite a big improvement

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HMRC has published the latest regional trade figures which show exports and imports for 2019. Given the time period this data reflects Brexit uncertainty rather than Covid 19 turmoil. 

In the year to December 2019, the overall value of UK trade in goods exports increased by 2.1% to £346bn compared with the same period in 2018. The overall value of imports increased by 0.3% to £483bn.

There was an increase in annual export value in the NE along with five of the 12 UK ‘regions’. NE exports increased by 0.7% or 87m to £13.3bn which was 4% of the UK total.

The biggest regional exporter was the SE of England at £46.5bn and Northern Ireland was the smallest at £9bn. The best performer in percentage terms was London which added 17% compared with Yorkshire & the Humber which dropped by 6%.

There was an increase in annual import value in the NE along with five of the 12 UK ‘regions’. NE imports increased by 3.1% or 437m to £14.4bn which was 3% of the UK total.

The leading regional importer was the SE at £98bn and Northern Ireland was the smallest at £8bn. In percentage terms London added 12% compared with Scotland which reduced imports by 7%.

The Netherlands was the NE’s largest export market with machinery & transport equipment the best export. Most of the NE’s imported goods came from Germany with machinery & transport equipment the biggest import.

Services

This month the ONS published data on regional services imports for 2017. The biggest component of services imported into the UK was £51bn of travel. This was 28% of the £181bn UK total imports of services.

The NE imported £4.8bn of services value in 2017 of which £1.7bn was travel. The largest importer of services was London at £60bn with Northern Ireland importing £1.6bn.

At a local level, the biggest importer of non-travel services into the UK was Camden and City of London at £14.5bn, almost double the next largest importer which was Westminster at £7.9bn. Of the 167 local areas, The Western Isles of Scotland imported the least amount, £21m, with Anglesey next at £31m.

In the NE, Tyneside imported £1.3bn of non-travel services compared with £168m in Northumberland.

The data on services exports was released by the ONS last year which showed the NE exporting £5.5bn of services which compared with London at £117bn and Northern Ireland at £2.9bn.

Other data

The ONS has also published the latest regional construction sector data to December 2019 which again reflects Brexit uncertainty rather than Covid 19 turmoil. Compared with the previous quarter all parts of the UK recorded a decline with the NE posting a 4.5% drop to £1.7bn.  The biggest decrease in the UK was 4.6% in the West Midlands; the SE was best with a 0.9% fall. Within this though 240 new houses were completed in the NE, an increase of 12% on the previous quarter.

More pre-pandemic data from the ONS showed unemployment in the region was 4,000 lower at 76,000 between December and February; the drop of 0.6% took the rate to 5.6%, a UK outlier, at 4.8% the West Midlands was next highest. Northern Ireland had the lowest rate of 2.5%, with the UK rate at 4%.

The South East had the highest employment rate at 80.1% which compared with 72.5% in the NE where 1.2m are employed; the UK rate was 76.6%.

The NE’s average property price decreased over the month by 1.3% to £125,053. The drop took the annual increase to 0.4%. In comparison, UK prices dropped by 0.6% to £230,332 during February, an annual growth rate of 1.1%.

Cleadon the wealthiest part of the region with Grangetown and Berwick Hills/Gresham the poorest, both of the region’s LEPs record below average productivity growth

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The ONS has published average household disposal income estimates for England and Wales in 2018. The incomes shown are after tax and housing costs are taken off.  The analysis has shown that 87% of local areas had an average household income of between £22,500 and £39,200; within this over a third were between £28,000 and £33,600.

Of the 50 areas with the highest total incomes, 41 were in London, with the lowest incomes more widely spread geographically across England and Wales. The North East, East England, London, and the South East had no local areas in the bottom 50.

The wealthiest area in England and Wales was Mickleover in Derby with incomes of £52,200 and the poorest was Highfield North in Leicester with £12,500. The two areas are 30 miles from each other and ranked 7200 places apart.

The wealthiest area of the North East was the Cleadon area of South Tyneside with £37,900. This ranked the area 333rd out of the 7,201 areas of the UK recorded. The poorest areas of the region were Grangetown (Redcar) and the Berwick Hills/Gresham areas of Middlesborough both with £15,800. These areas were ranked 7,141 out of the 7,201 areas of the UK recorded.

Like most regions of the UK, output per hour in the NE is below the UK average. Productivity per hour in the NE was 13.5% below the UK average which ranked the region eighth nationally for 2018. One reason for this is the high levels of hours worked and high productivity in London and South East which pulls up the UK average so much that all other regions fall below it.

The ONS has now released data for a longer period and at a subregional level. This gives further insight into the NE’s performance.

Perhaps the most useful data is the 2018 results for the 44 enterprise regions in the UK which comprise the 38 English local enterprise partnerships (LEPs) and six enterprise regions in Scotland, Wales and the border regions.

Thames Valley Berkshire LEP had the best productivity (in terms of hours and jobs) in 2018 at 35% above the UK average whereas the Black Country LEP at 24% below was the worst.

At 9% below the UK average Tees Valley LEP was ranked 20th, better than the North East LEP which was ranked 31st at 14% below.

In terms of productivity growth between 2010 and 2018 the Coventry and Warwickshire LEP was top with growth of 16%. Twelve economic regions recorded productivity levels lower in 2018 than 2010. The worst performer was the Buckinghamshire Thames Valley LEP which saw productivity drop by 11%.

Tees Valley LEP was ranked 24th with growth of 1.7%, again better than the North East LEP which was ranked 35th with productivity dropping by 0.4% over the eight years.

With the exception of Sunderland (+8%) all of the NE’s economic regions recorded productivity below the UK average. Northumberland had the lowest productivity, 23% below the UK average.

The growth in hours worked between 2010 and 2018 in Northumberland and Tyne and Wear was 5.5%, better than in Tees Valley and Durham which recorded 2.1%. In UK terms this level of growth was in the bottom five of the country’s 41 subregions.

If the increase in economic output is factored in then the sub regional performances are similar. Northumberland and Tyne and Wear was ranked 25th in the UK with growth of c2% and Tees Valley and Durham was ranked 37th with -2%.

More data from the ONS showed unemployment in the region was 1,000 higher at 80,000 between November and January; the uplift of 0.1% took the rate to 6.2%, a UK outlier, at 4.6% Yorkshire & The Humber was next highest. Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.9%.

The South East had the highest employment rate at 80% which compared with 71.7% in the NE where 1.2m are employed; the UK rate was 76.5%.

The NE’s average property price decreased the most in England over the month, by 2.6% to £126,592. The drop took the annual increase to 0.9%. In comparison, UK prices decreased by 1.1% to £231,185 during January, an annual growth rate of 1.3%.

Growth in the NE economy ranked seventh, regional unemployment still a UK outlier and NE earnings drop to bottom of the UK league

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For the 12 months ended December 2019, a nowcast published by the Economic Statistic Centre of Excellence (‘ESCoE’) on a rolling 4 quarter basis, has estimated that NE growth has dropped slightly from 1.2% to 1.1%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the NE seventh (previous ranking eighth) and suggests the region has marginally improved its position relative to the other eleven parts of the UK. Over the same period UK growth was 1.4%; growth in London (ranked first) was 3.3%; and growth in the East Midlands (ranked twelfth) was 0.1%.

Official ONS figures for an earlier period are not so good. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its third estimate for the North East, the other eight English regions, and Wales.  GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before ESCoE’s estimates shown above and compare GDP in the quarter ended June 2019 with the same quarter a year earlier. These more volatile figures showed the NE grew by 0.3%, down from 1.5% the previous quarter. This placed the NE ninth (previous ranking seventh) out of the twelve UK ‘regions.’

London topped the table with growth of 4.5% whilst UK growth over the same period was 1.4%. The NW was the worst performer and contracted by 0.7%, one of three ‘regions’ in the UK to suffer a decline.

In the same report, there was no surprise that the ONS’s figures also highlighted that the standalone quarter to June 2019 was worse for the NE than the previous quarter. The North East economy declined by 0.8% in April to June 2019, following growth of 0.7% in January to March 2019.

This placed the NE tenth (previous ranking fourth) out of the twelve UK ‘regions. Six regions of the UK saw their economies contract as did the UK overall by 0.2%.

In this period, the manufacturing industry experienced growth of 6.7% and made the largest positive contribution whereas the arts/entertainment/recreation and human health/social work activities industries fell by 56.0% and 7.4% respectively and made the largest negative contributions to growth.

Overall production grew by 5.4% whereas the services sector fell by 2.9%. Over the last two years there has been moderate growth in the production sector, the services sector had been steadily increasing (despite falling this quarter) and construction continues to show growth after a recovery in 2018.

Productivity

Like most regions of the UK, output per hour in the NE was below the UK average. Productivity in the NE was 13.5% below average which ranked the region eighth in the UK.

Two regions had productivity above the UK average in 2018, London +31.6% and the South East +9.1%. These regions record high levels of hours worked and their high productivity pulls up the UK average so much that all other regions fall below it. Wales was furthest off the average at -17.2%.

The NE slipped further down the rankings to tenth in terms of output per job. This means that on average workers in the NE worked shorter hours for each job compared with the UK average. The region’s 15.8% below the UK average compared with London at 40.5% above.

In terms of growth in output per hour, six regions of the UK expanded. The NE was ranked ninth as output per hour contracted by 0.8%. At 2.3% growth was fastest in Scotland and the biggest contraction was in Yorkshire and the Humber at 2.5%. UK growth was 0.5%.

In terms of sectors, productivity in non-manufacturing production and agriculture was better than expected but finance and insurance disappointed.

On average, in 2018 the UK economy produced about £35 of value for each hour worked, with finance and insurance top at c£69 per hour compared with accommodation and service activities productivity at c£17 per hour.

Labour

More data from the ONS showed unemployment in the region was 3,000 higher at 72,000 between October and December; the uplift of 0.3% took the rate to 6.1%, a UK outlier, at 4.5% Yorkshire & The Humber was next highest. Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.8%.

The South West had the highest employment rate at 80.1% which compared with 71.1% in the NE where 1.2m are employed; the UK rate was 76.5%.

In December, average earnings in the NE dropped by £22 to £530 per week, the lowest in the UK (previous ranking ninth). London had the highest average earnings of £805.

In the UK overall, average earnings grew by 2.9% or by 1.4% after inflation. After adjusting for inflation, regular pay is now at its highest level since 2000, whereas total pay (which includes bonuses) is still 3.7% below its peak in February 2008.

Housing

The NE’s average property price increased by 0.5% over the month to £130,977 the uplift took the annual increase to 1.8%. In comparison, UK prices increased by 0.3% to £234,742 during September, an annual growth rate of 2.2%.