Business report throws new light on North East economic crisis

May 29 2009 by Andrew Mernin, The Journal

Click here to read the full HSBC report

THE recession will cause the biggest shake up of the country’s business landscape since the industrial revolution, finally bridging the North-South divide.

That is the bold prediction of a major new report published today which also concludes that Newcastle will become an economic powerhouse – or ‘supercity’ – driven by new industries such as nanotechnology over the next 20 years.

Banking giant HSBC has compiled its Future of Business report to predict the evolution of corporate UK following the global financial crisis.

According to the report, as London’s Gross Value Added (GVA) falls 1.5% this year, the North East’s GVA will become more competitive, rising 1.9% in 2010.

It also says competition and living costs in the south are encouraging many new entrepreneurs to relocate away from the capital while job creation by self-employed people is also higher in the north.

Meanwhile, the fallout from the recession and the rise of mobile working could also play a role in bridging the North-South divide, it claims.

The report, from HSBC Commercial Banking and The Future Laboratory, predicts that the economic downturn will dramatically change the country’s business map.

It is forecasting the birth of five new ‘supercities’, including Newcastle, which will be driven by science and technology revenue streams.

Report author Martin Raymond said: "These supercities and regions will derive their status, income and prestige from new economic income streams such as biotech, stem cell research, innovation, gaming and even alternative work practices.

"Traditionally the south of England has been considered more successful than the north, but new evidence suggests otherwise."

The North East Chamber of Commerce (NECC) last night said it supported the report’s predictions that the region is destined to become an internationally-recognised hub for technology businesses.