Recession puts strength in focus
But big challenges remain to raise educational attainment, productivity and entrepreneurship.
The recession has brought the economic differences between the region’s cities, market towns and their rural hinterland into sharp focus. While all areas saw a rapid decline in business confidence in the second half of 2008, the severity of the downturn has varied.
Insight East, the region’s economic intelligence unit, has reported that areas of relatively high unemployment before last autumn’s banking crisis and stock market slump – Luton, Peterborough, Harlow, Stevenage and Southend – have seen the greatest rise in the jobless figures since. Between 2000 and 2005, the region’s unemployment rate was stable at 4 per cent or less of the workforce. But by the third quarter of 2008, the unemployment rate had risen to 5 per cent and topped 6.5 per cent by the summer of 2009 – the highest since 1997.
The combination of the property slump, difficult trading conditions on the high street and uncertainty over the global car industry has seen the region’s construction, automotive, engineering industries and retail sector hardest hit by the downturn. Housebuilder Bovis has closed its regional headquarters near Cambridge and the construction firm Haymills has entered administration. At the beginning of 2009, DHL announced that up to 200 posts were at risk of redundancy at its Argos distribution centre in Kempston and a further 300 jobs at its Bedford facility in the wake of the collapse of Woolworths.
Peterborough has seen major redundancies at a number of its biggest employers – ranging from more than 400 redundancies at Indesit, Grattans/Freemans and Perkins Engines. Against the trend, performance car manufacturer Lotus, based in Norfolk, has launched a new model, the Evora, to widespread acclaim and has plans to increase its East Anglian workforce by 150. The carmaker’s announcement that it will return to Formula One in 2010 after a 15-year break is also set to create 200 new engineering jobs in the region.
In the region’s more rural counties – Norfolk, Suffolk and Cambridgeshire – there have been plant closures and job losses in the food processing industries, including redundancies at Bernard Matthews Farms near Norwich and Grampian Country Foods in Haverhill. Tulip closed its plants in Linton and Thetford with the loss of 165 jobs. Ironically, agriculture has suffered only a relatively mild downturn, with land prices stable and reductions in fuel and fertiliser prices.
The East of England’s £2.3bn-per-annum tourist industry has seen bumper trade in 2009, thanks to the staycation trend of people holidaying in the UK and closer to home. There are signs too from mortgage lenders and estate agents that the region’s housing market may be recovering faster from the property slump than other parts of the UK.
The diversity of the East of England economy may yet prove to be its strength as it looks to emerge from recession. Start-ups in technology and bioscience – particularly around Cambridge and “Silicon Fen” and the new Genome Analysis Centre at Norwich Research Park – are set to lead the region out of recession, though towns rooted in more traditional industries may well take longer to recover.
Paul Hill
Business editor of the Eastern Daily Press