Forecasts of growth were 'optimistic'

Apr 28 2009 by Sarah Green, The Journal

FOLLOWING last Wednesday’s budget announcements, CBI North East’s Regional Council met up to discuss the state of the economy and the CBI’s latest growth forecast that indicated that while the worst of the recession may be past, there would be no recovery until spring 2010.

The general conclusion from the council was that the Chancellor’s growth forecasts of recovery at the end of this year were optimistic.

The council is chaired by Robin Bloom, senior partner at Dickinson Dees, and was attended by 35 of the region’s key business leaders, representing all sectors of the business community, including Greggs, Nissan and Northern Rock.

Robin Bloom kicked off discussions with the observation “Are we coming out of the deep freeze?”

The general response to this was that business planning is very difficult and it’s hard to forecast due to conditions being volatile. There are signs that trends are now going in the right direction but with reduced levels of activity.

Some hoped that the capital allowances reported in Wednesday’s budget would help business investment, but many businesses stated that they were not planning investment in the short term as planning was almost impossible.

There was one key theme that all sectors agreed upon and that was the need to retain talent in the region. There were real concerns that the region had to learn from previous recessions and ensure that we retained good skilled people so we were in a position to ramp up quickly once the economy picked up.

For manufacturers, the last three months have been tough.

Demand for UK manufactured goods slumped at its fastest rate in 30 years as output saw a record decline, but regional businesses revealed that they expected the pace of this decline to moderate slightly in the next three months.

Many voiced the challenge of competing with plants in Europe that benefited from short-time working subsidy. CBI’s Regional Council gives North East business a strong voice to influence national policy, with the current aim of minimising the long-term impact of current economic challenges and ensuring the region’s business leaders are prepared for the upturn.

Sarah Green is regional director of CBI North East