The State of Britain

NE

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%.

The gap between the NE’s tax take and public spending increases, the unemployment rate still a UK outlier, and trains dominate economic developments

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In the ONS’s estimate of regional public spending and regional tax revenues in 2019, the NE had a deficit of £10.7bn, a larger shortfall than the £10.2bn recorded in 2018. The North West, at £20.1bn, had the largest deficit in the UK which compared with London, which had the highest surplus of £38.9bn.

On a per person basis, the NE’s deficit was £4,027, larger than the £3,852 recorded in 2018. London had the highest surplus of £4,369 per person whereas Northern Ireland had the biggest shortfall per person at £4,978.

The only areas of the UK to run surpluses were London, the SE of England and the East of England. The West Midlands and the North East were the two regions in the UK to increase their net fiscal deficits over the year; the other seven regions reduced their shortfalls.

At a national level, the UK had a deficit of £623 per person which splits into deficits of £68, £2,713, £4,289 and £4,978 for England, Scotland, Wales and Northern Ireland respectively.

Public spending in the NE was £36bn or £13,560 per head, an increase on the 2018 figure of £34.8bn. London had the biggest spend of £123.9bn or £13,826 per head whereas Northern Ireland had the lowest at £27.9bn or £14,821 per head. Total government spending was £853bn or £12,835 per head.

The NE collected £25.2bn in taxes in 2019. London contributed the most to the Exchequer at £161.9bn, compared with the lowest contribution of £18.5bn which was from Northern Ireland. Overall the state raised £811.3bn or £12,213 per head in taxes an uplift of £34.1bn or £461 per head compared with 2018.

More data from the ONS showed unemployment in the NE increased by 5,000 to 80,000 between September and November 2019; the jump of 0.4% took the overall rate to 6.2%. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%. The NE rate of 6.2% is a UK outlier with the next nearest at 4.3% in London, the West Midlands and Yorkshire and the Humber.

The South West had the highest employment rate at 79.8% which compared with 71.4% in the NE. UK employment was estimated at 76.3%.

NE average property prices recovered after a big fall last month. Prices increased by 0.7% during November 2019 to £130,712, which took annual growth to 1.4%. In comparison, UK prices increased by 0.4% to £235,298 an annual growth rate of 2.2%.

On transport, the Office of Rail and Road (ORR) is investigating Network Rail over its poor service on routes used by commuter favourites Northern and TransPennine Express. Network Rail owns and operates rail infrastructure in England, Wales and Scotland.

The ORR said the proportion of scheduled train stops made on time in the last 12 months up to 4 January by Northern was 55% and 41% by TransPennine Express. This compares to the national average of 65%.

Early in January, Transport Secretary, Grant Shapps, announced he was evaluating a proposal from Northern Rail for options for continuing its franchise after the minister said the firm had the finances to continue only for a number of months. Then he surprisingly followed through and nationalised the firm, which consequently threw the Transpennine franchise into sharper focus.

On HS2, the Department for Transport and HS2 Ltd did not allow for all uncertainties when estimating initial costs the National Audit Office (NAO) has said. In 2015, HS2 was due to cost £56bn but a leaked government report suggested the total could reach £106bn. At this cost the decision whether to proceed or not will likely be taken at Prime Ministerial level next month.

Still on trains, Darlington council wants to highlight the town’s rail heritage ahead of Stockton and Darlington Railway’s bicentennial celebrations in 2025. The railway was the world’s first passenger line to use steam locomotives when it opened in 1825. Funding of £20m from the Tees Valley Combined Authority to create a world-class visitor attraction has been secured.

Further north along the line in Newton Aycliffe less positive train news, up to 250 jobs could be lost at the Hitachi plant which makes intercity trains for Avanti West Coast. Opened in 2015, the facility employs c900 people and was awarded a £350m contract to assemble 23 trains last month but earlier lost out on a contract for the Tyne and Wear Metro.

Administrators Deloitte have said 53 jobs will be lost in Crook, County Durham, after they could not find a buyer for iron and steel castings producer the Bondshold Group. The firm was established in County Durham in 1868 and only two years ago was one of the UK’s fastest-growing for international sales.

The closure of a Nolato Jaycare factory in Portsmouth with the loss of 115 jobs is likely to benefit the firm’s other plant in Newcastle. The medical packaging firm said the relocation would cost c£2.8m.

Tesco Bank is to create 20 jobs in Newcastle as part of an investment in online banking. This adds to 20 roles created when the bank announced Newcastle as the home for a technology hub in November. The company is recruiting test, software and systems engineers, systems architects, solution designers, project managers, and IT and business analysts.

NE economic growth in 2018 better than 2017, the Sunderland economy the fastest growing in the region, the Tees Valley LEP unable to move the growth dial and NE unemployment a cause for concern

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Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its 2018 full year estimate of economic activity by UK country, region and local area using gross domestic product.

The figures showed the NE economy grew by 0.9% in 2018, up from the 2017 growth rate of 0.5%. This placed the NE eighth (2017 ranking 12th) out of the twelve UK ‘regions.’

The UK and England growth rate in 2018 was 1.4%. Growth in Wales was 1.3%, Scotland grew by 0.9% and the Northern Ireland economy shrank by 0.5%.

London topped the 2018 table with growth of 2.0% whilst Northern Ireland was at the bottom.

Within the region, the Sunderland economy grew the fastest at 4.9%, followed by South Tyneside at 3.3% and Tyneside at 2.3%. Across the UK, the highest annual growth of sub national areas was in Falkirk at 10.5%.

Four areas of the region saw their GDP decline in 2018. The worst performer was Darlington at -6.3% followed by Hartlepool and Stockton at -4.0% and Northumberland at -2.5%. In UK terms, the lowest annual growth of sub national areas was in Mid and East Antrim at -10.1%.

GDP per head growth of 4.9% to £29,635 was seen in Sunderland which was the highest in the NE. GDP per head fell by 6.4% in Darlington to £28,866 but the lowest in the region was Northumberland at £18,978.

In terms of UK extremes, GDP per head was £395,309 in Camden and the City of London and £15,034 in Ards and North Down. These figures are a guide and are influenced by commuter flows.

In 2018, key drivers of the North East economy were arts and entertainment at 7%, wholesale and retail 5% and information and communication at 3%. Those areas that did not perform well were accommodation and food services down by 3%, education declined 2% as did water supply and services. Overall the services sector grew by 1.3% and production by 0.2% with construction declining by 2.1%.

The 2018 performance of the region’s two enterprise partnerships was also highlighted by the ONS. Of the UK’s 45 development bodies, the North East LEP was ranked 14th (2017 ranking 38th) with growth of 2.0%, but the Tees Valley LEP slipped from 42nd in 2017 to bottom in 2018 as the economy declined by 2.1%.

More data from the ONS showed unemployment in the NE increased by 15,000 to 78,000 between August and October 2019; the jump of 1.1% took the overall rate to 6.1%. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%. The NE rate of 6.1% is a UK outlier with London the next nearest at 4.5%

The South West had the highest employment rate at 80.8% which compared with 70.9% in the NE. UK employment was estimated at 76.2%.

NE average property prices fell by a substantial 2.3% during October 2019 to £129,360, the biggest drop in the UK, which took the annual fall to 1.1%. Only London recorded a bigger annual drop of 1.6%. In comparison, UK prices fell by 0.7% to £232,944, an annual growth rate of 0.7%.

The NE economy treads water, regional unemployment becomes a UK outlier, and mixed news in Sunderland

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Nine hundred year old Auckland Castle, in Bishop Auckland, once the private palace of the Prince Bishops of Durham, has reopened after a three year multimillion-pound renovation; the Castle hopes to attract 130,000 visitors a year. The project was funded by a £12.4m heritage lottery grant and £7m from the Auckland Castle Trust.

In Gateshead, £90m could be spent bulldozing a 20-acre site adjacent to the High Street. New housing and green spaces would be created; up to 30 businesses will be asked to relocate. Gateshead Council said it would be working with partners to realise the plan.

In Sunderland, Legal & General has announced it will invest in a plan which includes the development of the old Vaux Brewery. One of the three buildings planned for the project is the new Sunderland City Hall.

Vaux Brewery closed in 1999 after 162 years and the 26-acre site has been vacant since then. In July, online supermarket Ocado announced plans to set up a new centre at Vaux, creating 300 jobs. Overall, spend on the entire project could top £100m.

Also in Sunderland, Hays Travel has announced plans to hire an extra 1,500 staff. The travel agent has already taken on 2,330 former Thomas Cook employees but now plans to hire more staff, of which 200 people will be at its head office in the city.

Not such good news for the area was energy firm Npower’s decision to cut up to 4,500 jobs as part of a restructuring plan. Three call centres are under threat of closure, one of which is at Houghton le Spring, where 2,500 are employed.

Chinese firm Jingye says will invest £1.2bn in British Steel after it provisionally agreed to rescue the steelmaker. Hundreds of workers are employed by British Steel in the North East, at sites near Redcar; at Skinningrove, east Cleveland; and at Blaydon. The new owners did not put a number on how many jobs would be saved.

The Stats

Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its next estimates for the North East, the other eight English regions, and Wales, for the year to March 2019. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

The latest available figures showed the NE economy grew by 1.5%, up from 0.9% the previous quarter. This placed the NE seventh (previous ranking eighth) out of the twelve UK ‘regions.’

London topped the table with growth of 4.2% whilst at the bottom the Yorkshire and Humberside economy declined by 0.3%. Propelled by a drive to meet the original March 31st Brexit date, UK growth over the same period was 2.2%.

The ONS figures also highlighted that the quarter to March 2019 was better for the region than the previous quarter. The North East economy grew by 0.4% in January to March 2019, following growth of 0.2% in October to December 2018.

In this period, the health and construction industries grew by 6.9% and 3.2% and made the largest positive contributions to growth, whereas the education and energy industries recorded negative growth of 4.3% and 7.9%.

The services sector contributed the most to GDP whereas the production sector was a drag on the regional economy.

Estimates published by ESCoE last month for the year ended September 2019, a more recent period than the ONS figures, ranked the NE eighth (previous ranking was ninth) with growth of 1.2%, which suggests the region has had a slightly better summer relative to other parts of the UK.

Using this metric, UK growth was 1.45%. Growth in London (ranked first) was 2.32%, which compared with the South West of England (bottom) at 0.41%

More data from the ONS showed unemployment in the NE increased by 7,000 to 75,000 between July and September; the increase of 0.5% took the overall rate to 5.9%, the highest rate in the UK. The next highest rate was London at 4.5%. Northern Ireland had the lowest rate at 2.5% with the UK rate at 3.8%.

The South West had the highest employment rate at 81.0% which compared with 71.2% in the NE. UK employment was estimated at 76.0%.

In September, average earnings in the North East were up by £14 to £551 per week. London had the highest average earnings of £830. The lowest average earnings of £527 were recorded in Wales. In the UK overall, average earnings grew by 3.6% or by 1.8% after inflation.

NE average property prices were flat over the month at £132,769, which took annual growth to 2.0%. In comparison, UK prices fell by 0.2% to £234,370 during September, an annual growth rate of 1.3%.

NE house prices grow the fastest in the UK, regional rail worries, and Geordies and Teessiders see their happiness improve

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Unemployment in the NE increased by 3,000 to 74,000 between June and August, which took the overall rate to 5.8% which was the highest in the country.

The South West continued to record the lowest rate at 2.4% with the UK rate at 3.9%. The South West also had the highest employment rate at 81.0% which compared with 71.2% in the NE. UK employment was 75.9%.

Two months ago, North East average property prices increased by 1.7%, the most in the UK. This was all reversed last month with prices dropping by 2.1%, but the latest figures show prices went up again, this time by 3.1%, to £134,736.

The monthly uplift was the highest in the UK and took the annual increase to 3.3%. In comparison, UK prices grew by 0.8% to £234,853 during August, an annual growth rate of 1.3%.

The ONS’s Personal Well-being (or Happiness) Index has ranked the NE second out of the 12 UK ‘regions’ in terms of improved life satisfaction, only Londoners’ happiness improved  more. Average anxiety also improved in the NE over the last six years, with only folk from the East and North West of England less anxious.

Overall though, the Northern Irish were still the happiest in the UK with Londoners still the most miserable.

Development

In Middlesbrough, an £8m technology centre is to be built at a research facility on a former ironworks. The Welding Institute extension is part of the £55m Teesside Advanced Manufacturing Park. Half the funding has come from the EU’s regional development fund.

Also in Middlesbrough, a £250m project could see the town becoming a leading digital city. An initial £45m phase will see three 20-storey office and residential towers built, which will be the highest buildings within a 30 mile radius.

Also planned is a 750-seat indoor amphitheatre beneath a glass atrium and a 400-seat outdoor arena to host events such as lectures and concerts. The scheme will be funded jointly by the Tees Valley Combined Authority and Middlesbrough Council.

Jobs

Hays Travel staff have been moving to their new three-storey head office  in Keel Square, Sunderland, from four separate sites across the city centre over the last few months. 

Overall, headcount was about 1,000 in the city before the firm bought all 555 Thomas Cook stores in the UK for £6m, saving up to 2,500 jobs. Over 100 new jobs will be based in the Sunderland headquarters as a result of the deal.

About 3,000 of Nissan’s 7,000 workers are being moved from night shifts to day-time working which will be sufficient to maintain the existing 440,000 cars a year output. Some of this production will be the new Juke model which started being built this month.

The plant also makes the Qashqai and electric Leaf models. Earlier this year, the firm announced it was ending the production of two of its Infiniti cars with the loss of 250 jobs.

The government will open talks with other bidders for British Steel after failing to agree terms with Ataer Holding during the exclusivity period which started in August. Hundreds of workers are employed by British Steel in the North East, at sites near Redcar; at Skinningrove, east Cleveland; and at Blaydon.

Chemicals firm Ineos has launched a consultation on the potential closure of the Seal Sands Acrylonitrile plant on Teesside. Other activities at the site may safeguard some jobs but 220 posts are at risk.

Transport

The Northern Powerhouse Partnership’s Independent review into HS2 called ‘HS2 North’ was introduced in Parliament this month by the Northern Powerhouse All Party Parliamentary Group.

The key recommendation of the report is the establishment of HS2 North, a private sector special purpose vehicle modelled on the Olympic Delivery Authority which would integrate HS2 and Northern Powerhouse Rail.

HS2 North would be arms-length from government, contracting with private sector delivery partners and Network Rail, and overseen by Transport for the North.

Whilst no one doubts that HS2 will bring significant benefits to the Northern economy, this report, and a second Northern Powerhouse Partnership report, ‘HS2 and the Economy of the North’, identifies that further detailed work needs to be undertaken to pin down the economic benefits that the new line would bring.

Separately, CBI East Midlands, West Midlands, Yorkshire and Humber, London, the North East and North West regional directors also urged the government to build the HS2 rail project in full.

However, a paper by the Adam Smith Institute, also released this month, claims that HS2 will deliver limited benefits and that some Northern cities could lose direct trains to London.

The paper instead recommends upgrading existing routes with new signalling, doubling the number of tracks, reopening mothballed lines, building new sections of railway and targeting bottlenecks at key junctions.

Also on the trains, the government is considering whether the management of Northern Rail should be taken into public hands. The Department for Transport confirmed it was developing contingency plans with either a new short-term management contract with Northern or the Operator of Last Resort (‘OLR’) (effectively the Government).

The OLR is currently in charge of London North East Railway, the East Coast Mainline intercity franchise. Northern is a large, more complex commuter network, so the government is likely to take-on a more supervisory role, with Northern still able to run day-to-day services and take the blame.

In a bad month for Northern, politicians demanded that passengers still having to use the 1980s-built rail-buses called Pacer trains should be offered reduced fares. Northern had planned to withdraw them all by the end of this year but some will be retained into 2020 as a result of delays in the construction and delivery of new trains from manufacturer CAF.

The Pacers, a joint venture between British Rail and British Leyland, were originally constructed from the body of a bus and were intended to have a maximum lifespan of 20 years. In fairness though the Pacer is a survivor, other British Leyland vehicles from the 1980s like the Austin Maxi and Morris Marina have long gone