West Midlands can fight from "low base" - IoD
The West Midlands economy is "struggling" in the current downturn, according to John Phillips, the West Midlands regional director for the Institute of Directors. He told Insider the region is fighting the downturn from "a low base" but the business community can respond by boosting resources for small companies and encouraging young talent. His comments come after IoD figures showed the UK economy is set to grow by just 1.2 per cent in 2011.
Phillips, who has been with the IoD since 1993, said of the West Midlands economy: "I think it's struggling. We are starting from a low base.
"I don't think that should make people downhearted. We just have to ge on with it.
"We have issues with skills and I think we have lost too many of the bigger companies with corporate headquarters gravitating to other parts of the world.
"The regeneration will come from the SME markets and that's where we are working hard at the moment so that's where we are developing our efforts."
He said that the "way out" for West Midlands companies to fight through the downturn is to turn to youth and to develop their "bright ideas".
He added: "It's about older people with grey hair mixing with young people with innovative ideas. They always have great ideas but need the experts to take it to market. That's why we need to get our act together with business support. That's why the demise of Advantage West Midlands has come at a difficult time."
The IoD's economic forecast for 2011 says that after some growth this year, Britain's economic performance will "flatten out".
It also claims there is "too much doom and gloom" surrounding the comprehensive spending review, but there also needs to be "greater realism about weakness elsewhere in the economy".
If the IoD forecasts prove correct, the Chancellor may need to find more spending cuts or tax rises to meet his budget deficit targets.
John Rider, chairman of the IoD in the West Midlands, said: “After an extraordinary financial crisis, fiscal explosion and the introduction of unconventional monetary policy the level of economic uncertainty remains very high.
"The effectiveness of traditional forecasting models is open to very serious doubt when they have little or no capacity to incorporate the effects of quantitative easing. The new economics do not fit the model and in such circumstances forecasting becomes what it always has been, an issue of feel and judgment."
He said the IoD had consistently argued that economic recovery would be relatively slow and smooth. However, there could be a few quarters of stronger growth where the economy grows as expected followed by a period when the recovery flattens out.
Rider added: "The crucial point underpinning both recovery cycles is that there are significant forces accelerating the economy forward, but they are competing with a very powerful set of decelerating influences. We do not think the decelerating forces will lead to a double-dip recession – but the risk is there especially if business and consumer confidence begins to slide."
