UK economy: The view from the North East

Tyne River scene

If there's any part of the UK that's looking forward to the benefits of growth, it's the North East of England.

It has the highest rate of unemployment and the lowest rate of job creation in the country.

More than 20% of workers in the North East are employed in the public sector, the highest proportion of the workforce in England.

Public sector cuts have hit the region hard since 2010, but like the overall national picture the private sector in the region has continued to create jobs.

Exporters have thrived and the North East is now the only region in England that exports more than it imports.

So how are businesses and workers feeling about the recovery?

THE EMPLOYEE

Chris Dennell, technician, Quick Hydraulics

Chris

Chris Dennell thinks nothing of working seven days a week at the Quick Hydraulics factory in North Shields.

The 29-year-old has been in the industry for nine years and has never seen business so good.

"Work seems to have increased tenfold over the past few years. It's been a real challenge trying to keep up with demand.

"We feel we have a responsibility to the company to get the work done - to keep things moving forward."

The overtime Chris does at weekends has allowed him to save for his wedding. But despite being in a secure job with annual pay increases he's found the cost of living a challenge.

"My wife and I have always budgeted for our monthly outgoings but with the price of gas and electricity going up, we have had to tighten our belts and cut down on the luxuries that we used to buy.

"I've given up my season ticket for the football at Sunderland as I can only save for one thing at a time."

THE EMPLOYER

Andrew Esson, chief executive, Quick Hydraulics

Andrew Esson says firms are spending on new projects

Andrew Esson bought Quick Hydraulics two years ago and has not looked back since.

The company has gone from 14 employees to 29 and he's hoping to take on more in the coming months.

"We feel the pulse of business in the North East and what we are finding is that companies who weren't investing two years ago, are now having funds released and are kicking new projects into action."

The company supplies parts to companies in industries ranging from oil and gas to paper processing.

Sales are up 25% on last year, with many customers benefiting from booming emerging market economies.

"Two years ago I would have said that if you were exporting to Europe, you were not doing well - but now we are seeing that anyone who's exporting is beginning to do well.

"Our biggest challenge in the North East is that we have a skills shortage.

"We had a board meeting this morning and we agreed to recruit some new staff to keep up with demand, but the challenge is to find people with the right skill levels."

HEAD OF THE CHAMBER OF COMMERCE

James Ramsbotham, chief executive, North East Chamber of Commerce

James Ramsbotham: "We've very much got a two-speed economy"

As chairman of a local construction group, James Ramsbotham has seen the strain of the recession up close over the last five years.

But in his role as head of the North East Chamber of Commerce, he's becoming increasingly optimistic about the recovery in the region.

"Four years ago businesses like Nissan [based in Sunderland] were employing only 3,000 people, now they are employing 6,000.

"We are also a major part of the supply chain for the oil and gas sector in the North Sea, which has thrived over the past few years."

Mr Ramsbotham says that the nascent economic recovery is beginning to give businesses the confidence they need to expand.

"In the first two quarters of this year, we saw some real confidence in sales - both domestic and export sales for which this region does so well.

"Now what we've seen is that becoming a confidence to invest in plants and machinery, and also in taking on new staff and training them up."

Although the private sector is creating jobs, Mr Ramsbotham says the public sector is still a drag on the local economy.

"We've very much got a two-speed economy - we've got the really good engineering and manufacturing industries that are doing incredibly well.

"But when you look up in the High Street and you see the retail sector on its knees, you realise the impact that the cuts in the public sector have had on spending in the region."

More on This Story

More Business stories

RSS

BBC Business Live

  1.  
    STANDARD CHARTERED Ian Gordon Banking analyst, Investec

    "There appears to be no suggestion by the New York Department of Financial Services of any wrongdoing or breach of regulations by Standard Chartered. What it claims to have identified is a deficiency in a surveillance system at Standard Chartered's New York branch to identify and/or flag certain "high risk" transactions... We estimate a 1-2% adverse earnings impact."

     
  2.  
    INTEREST RATES 09:52:

    For the majority of the Monetary Policy Committee, "there remained insufficient evidence of inflationary pressures to justify an immediate increase in Bank Rate", the minutes showed. They noted that the latest Inflation Report had inflation reaching the 2% target only at the end of a three-year forecast period. Economic growth is likely to slow slightly, and wage growth remains weak, they said.

     
  3.  
    INTEREST RATES 09:44:

    For Martin Weale and Ian McCafferty, "the continuing rapid fall in unemployment alongside survey evidence of tightening in the labour market created a prospect that wage growth would pick up", the MPC minutes show. "Since monetary policy, too, could be expected to operate only with a lag, it was desirable to anticipate labour market pressures by raising Bank Rate in advance of them."

     
  4.  
    INTEREST RATES 09:32:

    The MPC minutes show that Martin Weale and Ian McCafferty both voted to raise interest rates to 0.75% from 0.5%. It's the first time the MPC's vote has not been unanimous for more than three years.

     
  5.  
    INTEREST RATES Breaking News
    Bank of England

    The Bank of England's Monetary Policy Committee voted 7-2 in favour of holding interest rates at 0.5% earlier this month, minutes have shown.

     
  6.  
    MARKET UPDATE 09:22:

    Shares in Balfour Beatty have fallen more than 6% after the company rejected the latest takeover proposal from rival Carillion. Glencore shares are up 0.4% after the commodity trader and miner reported better-than-expected first half profits.

     
  7.  
    MORTGAGES 09:13: BBC Breakfast
    BBC Breakfast

    The expectation that interest rates are going to start rising in the coming months has led to a surge in homeowners remortgaging. The Money Advice Bureau says there was a 21% spike in remortgaging applications last month. Kerry Rowling from Marble Mortgages told BBC Breakfast it's worthwhile putting the time in to find a good rate. And she says there are still many fee-free deals around.

     
  8.  
    FRENCH ECONOMY 09:02: BBC Radio 4

    The Today programme has been looking at why the French economy has ground to halt, with zero growth over the past six months. "The main drag on French growth is the lack of investment," says Eric Chaney, chief economist at AXA Group. "Companies in France do not want to invest because of very high taxation, very tough regulation and a lot of uncertainty about government policy."

     
  9.  
    AMAZON ROW 08:48: Radio 5 live
    Amazon screen shot

    Amazon has been criticised recently over its treatment of publishers. Economist John Kay says on Wake Up to Money the traditional publishing business is on the way out. "It used to be a complicated business getting a book into the hands [of the public]," he says, "it's not any more." Authors will get more proceeds from the books, he says, and Amazon won't have a monopoly.

     
  10.  
    GLENCORE BUYBACK 08:39:

    Commodity trader and miner Glencore has said it will buy back $1bn of shares over the next six months. The company also reported an 8% rise in first half earnings to $6.5bn (£3.9bn), beating analysts' estimates.

     
  11.  
    MARKET UPDATE 08:24:

    After two days of strong gains, the main European stock markets have inched lower in early trade.

    • The FTSE 100 is down 11.11 points at 6,768.20
    • Germany's Dax index is 14.86 points lower at 9,319.42
    • In France, the Cac 40 is down 9.57 points at 4,244.88
     
  12.  
    ARGENTINA DEBT 08:20:
    Cristina Fernandez

    President Cristina Fernandez has proposed laws that will push bondholders to swap defaulted debt for new bonds governed by Argentine law, to try to avoid a US ruling that prevented her government from paying some creditors. Argentina entered default last month after a New York court blocked an interest payment of $539m owed to holders of bonds issued under US laws that was restructured after the country's record 2002 default.

     
  13.  
    INTEREST RATES 08:02: BBC Radio 4

    The Bank of England's Monetary Policy Committee (MPC) has voted unanimously to hold rates at 0.5% for the past three years. Peter Warburton, who sits on a 'shadow' MPC, organised by the Institute for Economic Affairs, tells the Today programme that it looks like the consensus is beginning to crumble, although the latest MPC minutes could still show a 9-0 vote in August.

     
  14.  
    Via Twitter Adam Parsons Business Correspondent

    tweets: "Diego Hernández to become Chief Executive Officer of FTSE100 miner Antofagasta"

     
  15.  
    HEINEKEN RESULTS 07:35:
    beer

    Heineken beat analysts' forecasts for its first-half results, although along with Carlsberg it said it sold less in Russia. The Central and Eastern Europe business was hit by bad weather and floods. Operating profit before one-off items rose 9.6% in the first six months of the year to 1.45bn euros ($1.93bn; £1.16bn),

     
  16.  
    CARLSBERG RESULTS 07:23:
    beer

    Danish brewer Carlsberg has said annual profits will drop because of western relations with Russia. The country generates 35% of operating profit but Russia could enter recession this year. "The overall performance in the second quarter looks fine, but they are downgrading their guidance due to the macroeconomic uncertainty in the Eastern European region. So it is a mixed bag," analyst Morten Imsgard from Sydbank said.

     
  17.  
    BALFOUR BEATTY 07:18:

    Balfour Balfour said it rejected Carillion's latest offer because it failed to address "two key concerns". It said there were "considerable risks" associated with the proposed business plan. It also objected to Carillion's intention to halt the planned sale of Balfour's Parsons Brinckerhoff business in the US, "at a point when it is reaching a successful conclusion".

     
  18.  
    BALFOUR BEATTY 07:08:
    Balfour Beatty worker

    Balfour Beatty has rejected the latest takeover bid from rival Carillion. The offer was sweetened on Tuesday for the third time, valuing Balfour at more than £2bn. But Balfour said the proposal was "not in the best interests" of its shareholders.

     
  19.  
    BHP BILLITON 06:57: BBC Radio 4
    BHP Billiton logo

    On Tuesday, mining giant BHP Billiton announced plans to spin-off billions of dollars worth of assets into a new company. Elaine Coverley, head of equity research at Brewin Dolphin, told the Today programme that it's a sign that shareholders in the sector are demanding more discipline from management and seeking better dividends.

     
  20.  
    STANDARD CHARTERED 06:44: Radio 5 live
    Standard Chartered

    Elaine Coverley, head of equity research at Brewin Dolphin is on Wake Up to Money, this time talking about Standard Chartered. Standard Chartered has agreed to pay $300m (£180m) to New York's top banking regulator for failing to improve its money laundering controls. "It's a blow," she says. "In the past the management were very well respected."

     
  21.  
    JAPAN EXPORTS 06:31:
    Tokyo port

    Japan's exports grew in July for the first time in three months, figures have shown. Exports were up 3.9% from a year ago thanks to higher shipments of cars and electric machinery. However, imports rose by 2.3%, largely due to purchases of oil and gas. This meant the trade deficit came in at a larger-than-expected 964.0bn yen ($9.4bn; £5.6bn) for the month.

     
  22.  
    BALFOUR MERGER 06:16: Radio 5 live

    Elaine Coverley, head of equity research at Brewin Dolphin is on Wake Up to Money. Carillion is back with improved terms to buy Balfour Beatty. "It is getting more hostile," she says. Balfour Beatty shareholders "need to petition the board to look at this offer much more closely", she says.

     
  23.  
    INTEREST RATES 06:10: Radio 5 live
    Bank of England

    A rise in interest rates is "long overdue", economist Peter Warburton tells Wake Up to Money. The minutes from August's meeting of the Bank of England's Monetary Policy Committee are out later and could show some members favoured a rate rise. Mr Warburton thinks several economic indicators suggest rates should already have gone up.

     
  24.  
    PALLADIUM PRICES 06:02: Radio 5 live

    Jim Slade, a director of European Exhaust & Catalyst, is on Wake Up to Money talking about palladium, which is used in catalytic converters. The price of palladium has risen by 25% this year. "There's a lot of debate about Russia and whether they have a huge stockpile or whether it's depleted," he says.

     
  25.  
    06:00: Nick Edser, Business reporter

    Good morning. You can email us at bizlivepage@bbc.co.uk and tweet us at @bbcbusiness.

     
  26.  
    06:00: Howard Mustoe Business reporter

    Hello. Today we can look forward to minutes from the Bank of England's Monetary Policy Committee, plus company results and analysis. Stay tuned.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.