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Regional Economic Development:
Recession & Recovery
Institute of Economic Development
Bournemouth, 7th October 2009
Nigel F Jump
Chief Economist
South West of England Regional Development Agency
UK economy : growth & inflation
4.00
3.00
2.00
1.00
2010 q3 fc
2010 q1 fc
2009 q3 fc
2009 Q1
2008 Q3
2008 Q1
2007 Q3
2007 Q1
2006 Q3
2006 Q1
2005 Q3
2005 Q1
2004 Q3
2004 Q1
2003 Q3
2003 Q1
2002 Q3
2002 Q1
-2.00
2001 Q3
-1.00
2001 Q1
0.00
-3.00
UK real GDP % ch qoq
-4.00
UK real GDP % ch yoy
-5.00
-6.00
10.00
35.00
30.00
Consumer prices LHS
8.00
25.00
Producer prices LHS
20.00
6.00
Input prices RHS
15.00
10.00
4.00
5.00
2.00
0.00
-5.00
0.00
2001
Q1
-2.00
2001
Q3
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Q1
2002
Q3
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Q1
2003
Q3
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Q1
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Q3
2009
Q1
2009
Q3
2010
Q1
2010
Q3
-10.00
-15.00
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UK
Aug
PMI Employment Index - Latest Month
Jul
2009
Jul
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SW
May
2008
Apr
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SW
Apr
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60
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65
60
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35
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SW economy : worst over?
PMI Output Index - Latest Month
UK
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2009 Q2
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2003 Q2
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2000 Q2
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1998 Q2
1997 Q2
1996 Q2
1995 Q2
1994 Q2
1993 Q2
1992 Q2
SW economy : or is it?
12
10
8
SW unemployment rate
6
4
2
0
6.0
Claimant Count Rate, Aug 08- 09
5.0
Aug 2009
4.0
3.0
2.0
1.0
0.0
SW economy : story board - cycle
Severe contraction in manufacturing,
construction & related services (Nov ‘08 – Apr ‘09)
hence, first, Swindon, Bournemouth-Poole
then Bristol, Plymouth & spread across SW peninsula
Some recovery (May-August ‘09)
“restocking” and tourism “blip”?
fear of new wave of closures/lay offs in autumn
SW unemployment rise commensurate with UK trend
again, widely spread but most urban north/east
may be “hidden” elsewhere … e.g. rural communities?
Business: “cash & credit” paramount.
focus shifting from recession-fighting to strategies for recovery
- get plant & workforce right for “new” market conditions
SW economy : story board - structure
Region of regions – north/south & east/west
Progress on relatives – tyranny of averages
Low wage, high employment
part-time and self-employed
inward migration … ageing
skilled population … yet
Some great clusters … but not many
loads of SMEs - good & not so…
aspirations - lifestyle … non-global
Innovation – skills – access :
Environment
Recession & recovery: development issues 1
Timing is everything
most interventions take time to
formulate, instigate, monitor & evaluate
real success or failure unknown for years
but we bring things on … & 4.5:1
Conflicting priorities
economic cycles - subjective counterfactuals
budget cycles
- get it out v get it right
political cycles - policy shifts & raids
event cycles
- what are you doing about swine flu?
Recession & recovery: development issues 2
Efficiency & effectiveness
legacy -> hunter/gathering -> auditors – farming?
optimisation vs satisficing
specialisation vs diversification
intervention vs laissez faire
agglomeration, spill overs & trickles
Equity
spatial strains: national vs regional vs local
“buggins” turn & “nimbyism”
rural & urban
best & worst
Applied regional economics
see-saw of purism & pragmatism
Recession & recovery: development issues 3
Impact:
people –> business <– place
static measures vs dynamic links
VfM £ for £ - multipliers
SAV & externalities
Additionality
one person’s net benefit is another person’s leakage or
displacement
Borders – competition v co-operation
Conclusion
Recession & recovery
structural & chronic
necessary & healthy
vs
vs
cyclical & acute
collateral damage
Regional Economic Development is:
market & institutional failure
comparative advantage
- pick themes not winners
co-operate in order to compete
Productivity still the holy grail