Economy back on track soon

Dec 22 2009 by Sarah Green, The Journal

YESTERDAY, the CBI announced that the UK economy is finally expected to exit the recession in the fourth quarter of 2009.

Although growth will remain subdued – with GDP still unlikely to have reached pre-recession levels by the end of 2011 – this will represent an important psychological breakthrough for many.

The CBI’s latest economic forecast predicts that the recession will end when UK growth resumes in the fourth quarter of this year, helped by consumers bringing their spending forward to beat January’s VAT rise. Subsequent growth in the first two quarters of 2010 is expected to be weak, but this should strengthen as the global economic recovery gathers pace, businesses rebuild stocks and household spending recovers.

News of growth – however tentative – will come as a relief to many who are keen to forget the turbulence we have experienced during the past twelve months, and will hopefully represent a fresh start for a new decade.

However, while many will focus on the bad times it is all too easy to forget the positives that the last year has brought with it for the North East.

Offshore wind, clean coal and electric vehicles all promise to make our region a hive of low-carbon activity going forward. Inward investment into the North East remains stable, house prices are finally on the road to recovery, and the region’s universities continue to go from strength to strength – with special praise due to the University of Teesside, which won the prestigious Times University of the Year award. With the launch of the Great North Revolution, business in our region has created a project which aims to usher in a new era of dynamism and success.

More generally, it is also possible that the uncertainty and instability of the last year has acted as a catalyst for the implementation of new and fresh approaches to business. The CBI’s report The Shape of Business has identified factors including the adoption of new financing models, innovative attitudes to supply chain management, a rise in the importance of sustainability and ethics and new approaches towards flexible workforce as key issues to which businesses will be giving serious consideration during the next decade.

It is entirely possible that, in years to come, we will be talking about 2009 as a ground-breaking period.

I wish all businesses in the North East an excellent Christmas and a successful and prosperous New Year.

Sarah Green is regional director of CBI North East