Hopefully confidence will return

Oct 13 2008 by Kevin Rowan, The Journal

ONE of the features of the current economic and fiscal dynamics is the speed of change, how quickly what appeared to be secure financial institutions have become, in what seems a matter of days, vulnerable in the extreme, from relatively small travel firms to global banks.

The discourse in the North East has changed too, from strenuous efforts to avoid “talking ourselves into a recession”, to a clear focus on seeking to minimise and mitigate the impact of huge, financial processes and flows.

Trade unions can provide an interesting barometer for the here and now. Union officers and representatives I talk to have changed their story too. Just a few weeks ago they were, individually, dealing with maybe one to two redundancy issues per month, last week the reports were of these conversations happening weekly, often twice per week.

In a buoyant economy job losses can usually be absorbed, when Atmel pulled the plug we saw very little impact on the broad economic indicators, even though around 1,000 workers lost their jobs there. In today’s much more uncertain, more insecure environment, frequent job cutting has not only an obvious, direct impact on those concerned, there is a cumulative and dramatic impact on the economy and on the confidence necessary to underpin growth.

So far, the interest rate cut of last week and Government efforts to engender some stability and security in the banks appear to be like catching water in a net. Time will hopefully prove confidence will return to the financial institutions, but these dynamics are global, putting solutions beyond any single government, and the lack of any sense of urgent propensity to intervene collaboratively at even the European level will not accelerate a restoration of confidence. This is a big test for the EU, one that so far it appears not to be up to.

At a regional level much of our efforts need to be around keeping the faith and seeking to affect what we can impact upon. Just a few months ago the economic indicators had consistently been showing that the region really was getting its act together economically, employment rates were higher than they’ve ever been, productivity was growing faster here than anywhere else in the UK, our economic base is becoming ever more diverse and robust and we have been closing the gap on other regions in meeting our skills challenges.

It is the case that this region will be relatively well placed to grow out of the difficult period ahead, with a stronger economic base than we’ve had for generations, with a better skilled, motivated and flexible workforce. So confidence now does remain important.

Equally, supporting people who are losing their jobs is something the North East, sadly, has much experience of, preparing for a prosperous economic future might seem difficult right now, it is also vital.

Kevin Rowan is regional secretary, Northern TUC