A positive start to the New Year

Jan 13 2010 by Simon Lenney, The Journal

THE publication this week of the North East Business Barometer survey provided a welcome dose of good news as firms battled against the snow in a difficult start to the new year.

This latest edition of the survey, produced by the North East Chamber of Commerce in partnership with Barclays, showed a swathe of key indicators turning positive for the first time since mid-2008. These included UK orders, export sales and orders and investment plans for both plant and training.

After a period of very difficult trading conditions, not just in the North East but across the globe, this must be taken as positive news. With the public finances sure to come under major pressure in 2010, we need our businesses to perform strongly to see an overall upturn in the region.

One indicator which sadly remains negative is employment. This is known to lag behind economic recovery, but it demonstrates why it is crucial to make sure that recovery is as swift and strong as possible.

At Barclays, we’ve seen at first hand the resilience of businesses in the region over the past 18 months, and now we’re pleased to be witnessing the same growing optimism that is demonstrated in the North East Business Barometer. We must hope this is backed up by official data showing the recession is over.

But we must be careful to temper this with realism about the difficult conditions which still remain. Firms will face new challenges in the early part of 2010, including a return to higher VAT rates, inflationary pressures and the uncertainty of a general election period.

Indications of growth in the latest survey are as much a sign of where we’ve been as where we’re going. Given the depth of the recession, reports of growth do not necessarily point to a swift return to pre-2008 performance. The end of the survey period coincided with the announcement of Corus’ plans to mothball facilities in Tees Valley, which would clearly have a major impact on the region’s economy.

But it is nevertheless welcome to see our business community enter this year with renewed confidence and we must all work together in the coming months to demonstrate that this confidence is well placed.

Simon Lenney is commercial director, North East Team at Barclays