Economic Outlook Report For September 2010

The outstanding recent news has been the likely sale of the Redcar Teesside Cast Products steel works to Thai company SSI. Whilst a £320m deal has been agreed, the sale may not be finalised for a while. However, the prospects for completion of the sale seem good, and would be a major boost to the Tees Valley economy. Although the precise number of jobs created are not yet known, several hundred workers are likely to be employed directly with other jobs likely to be created by contractors and in the supply chain. There is further good news from Corus as they announced plans to build a new plant producing foundations for offshore wind turbines, employing 220 workers.

The Tall Ships race at Hartlepool was extremely successful, attracting an estimated 970,000 visitors over the whole event (a third of whom came from outside the region), generating £16m of spending in the local economy and £50m regionally. There are hopes that the race will revisit Hartlepool before too long.

Overall, the economic news has been reasonably positive in recent months. The UK economy has grown, manufacturing and consumer spending have been reasonably buoyant, unemployment has fallen and business confidence has shown some improvement over that experienced in the depths of the recession. However, there are already signs of a slowdown, with sharp falls in activity in the housing market, and construction and service sectors, especially in those companies reliant on public sector contracts.

However, the future path of the economy, locally and nationally, is still unclear. Even those economic commentators who do not believe the economy will experience a double dip recession say that the possibility cannot be ruled out. Severe cuts in public sector spending are likely to have a significant impact on the local economy – indeed, a study commissioned by the BBC named Middlesbrough as the least resilient area in England, closely followed by Redcar & Cleveland and Hartlepool. The Government has already announced the demise of Primary Care Trusts and most regional bodies including One North East, the Government Office for the North East and the Strategic Health Authority. Also, all other public sector organisations are planning for substantial budget cuts. The NHS has already announced 200 managerial job cuts, with significantly more jobs at risk during the forthcoming reorganisation.

Download Economic Outlook Report for September 2010: