North’s economy is fastest growing

Dec 15 2007 by Adrian Pearson, The Journal

THE North-East has the nation’s fastest growing economy – despite an average income much lower than the rest of the UK, according to a new report.

Government figures released yesterday show that despite household incomes much lower than the national average, the region is making impressive progress towards catching up with the prosperous South-East.

The promising statistics were revealed in the Gross Value Added (GVA) figures.

These GVA figures are the Government’s way of finding out how much everyone in the UK contributes to the economy – known as the “wealth per head” statistics.

And while the region earns approximately 19% less than the UK as a whole, the 5.5% growth means it is rapidly catching up.

And this will be good news to planners at One NorthEast, who have set themselves difficult GVA targets.

Business and Industry Director Ian Williams said that despite the shocking news of job losses in Spennymoor, the region would continue to grow.

“The average increase nationally is below that seen in the North- East and that is at least a welcome sign.

“It shows the little old North-East is growing faster than anywhere else and we have the ability to keep that going. If you look at the national position we are starting from below the national average, and that has been the case for decades now. But we are growing fast. We are closing the gap.”

The growth is a step in the right direction for One NorthEast’s ambitious – and in some respects controversial – economic targets.

The influential Organisation for Economic Co-operation and Development and think-tank ippr North have both called for the development agency to drop plans to create up to 22,000 extra jobs by 2016.

Mr Williams said: “Our ambition has always been to reach 90% of the national average.

“Now some did say that was too ambitious, but these were targets agreed by the public and private sector and when we formed these targets the private sector urged us to be more ambitious and we decided to heed their advice.

“We need these ambitious targets to push us towards what will be unprecedented growth, and since we are now above the national average for growth we are hopeful that we will meet these targets.”

Olga Mrinska, research director at ippr north said: “Today’s figures are encouraging. Growth in the North is higher than expected, but northern regions are still playing catch up to the Greater South-East where growth is much stronger.

“If the Government is to close this persistent gap, it needs to focus on more than just economic performance.

“This also demands stronger policies to drive economic growth across employment, skills, enterprise and transport and the public sector.”

Alastair MacColl, chief executive of Business Link North-East, said: “We’re really pleased with the region’s performance. This growth in productivity signals a significant step in the right direction and provides an important kick start towards strengthening the North-East economy.

“We intend to build on this success and work with North-East businesses to harness a continued and consistent increase in regional productivity.

“This means understanding customers’ potential and bringing in the best services from the private and public sector to help realise it.”

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Wealth gap divides region in two

THE region is facing an internal divide as prosperous Northern counties continue to grow faster than those in the South.

The North-East is growing at an impressive rate overall, but within the region there is a striking divide in average wealth per head.

While Northumberland and Tyne and Wear remain the region’s powerhouse, Tees Valley and Durham were rated the UK’s fourth worst for GVA performance.

Average wealth per head in the north of the region is £15,511 compared to just £13,097 in the south. The uneven distribution of wealth in the North-East will continue to be a ONE focus in the new year.

Business and Industry Director Ian Williams said: "We will continue to help those parts of the economy move towards research and development.

"We want all parts of the region to play a part in the successful growth. We know other parts are growing better and what we do now is say how do we ensure these parts share in this growth, and form policy around that."