Region well placed to survive economic slowdown
May 29 2008 by Adrian Pearson, The Journal
THE North East’s top economist has dismissed fears of a recession crippling the region – but warned that the days of uninterrupted economic stability are over.
Paul Mooney, chief economist at development agency One NorthEast, said last night that the region is “remarkably well placed” to survive the economic slowdown currently worrying business leaders across the UK. His knowledge of the economy has convinced him that while the region may not see its impressive record of recent years matched in the near future, there is nothing to suggest the North East will not achieve its targets of narrowing the North-South wealth divide.
Mr Mooney said that while he is realistic about the state of the economy and the problems presented by the credit crunch and high fuel prices, he is cautiously optimistic about the impact these will have on North jobs and house prices. He said: “We cannot get away from the fact that the economy is slowing and cooling down quite a bit.
“Now, while I don’t think we can expect to see growth at the levels we have seen in 2006, for example, and we will see a decline, we can say that there will be continued growth in the North, but at a slower rate. There are ups and downs and that is the nature of the economy.”
The development agency aims for the region to reach 90% of gross value added (GVA) per head – the Government’s way of calculating how much each person is worth to the economy – by 2016, which means creating thousands of new jobs during the next eight years.
The region’s GVA per head currently stands at 81.5%, a far stronger position than many had previously thought possible, with North East economic growth outstripping the UK average for the past three years. And the economist has now committed One NorthEast to meeting this target despite the current fears gripping business groups. Mr Mooney said: “No one can ever say that we will be recession proof. The point is that we sometimes forget that the economy goes up and down. We’ve got used to a degree of stability in the economy. We need to accept that things can change, but nothing in the numbers so far has suggested that we will end up in a recession.”
Mr Mooney admits the next few years will be less prosperous than recent years, and he cited a house price study which predicted that by 2010 the region will still be seeing houses sold for less than their current value.
He added: “The message seems to be that the North East will not be immune to some of the potential declines but we will not see the major falls being forecast. There is a very mixed message. We are not saying it is all hunky dory, it’s not. But equally you should not believe all of the scare stories.”
