IT SEEMS odd to be hailing a 0.2% growth in GDP for the three months to June 30 as good news but, considering the gloomy forecasts, the figures could certainly have been a lot worse.

Indeed, when one takes into account the fact that the Office for National Statistics reckons that were it not for one-off factors such as the Royal Wedding bank holiday and the effects of the Japanese earthquake GDP would have been 0.7% ahead, the figures suggest the economy is unlikely to plunge back into recession. All of which, viewed from the City at least, might be taken as encouraging signs. But how should the figures be interpreted from here in the North East?

Well, the important story is not really about how the economy as a whole is performing – we’ve known for some time that we’re on a bumpy and sluggish road to recovery.

Instead, it’s the varying picture that is emerging across different sectors of the economy and different parts of the UK that is of most interest – and almost certainly of most concern for this region.

Much has been written in this regard about the success of the manufacturing sector and the comparative struggles of those firms selling services. The Government has, to some extent, relied upon this trend to address the regional imbalances within the UK economy given the relative preeminence of manufacturing in the North.

There’s some truth in this, of course, but we shouldn’t fool ourselves that the picture is entirely rosy. One important factor that is often overlooked, for example, is how modern manufacturing of the type the Government rightly wants to see develop often employs relatively few people due to the advent of new technology and so has a limited impact on easing unemployment.

In contrast, a major drag on the recovery appears to be a combination of falling real wages and consumers’ propensity to save rather than spend.

Commentators also tend to agree that the impact of the swingeing public sector job cuts has yet to make it through to the numbers as the lay-offs are only just beginning to take place. As we know, that will hit regions such as the North East disproportionately hard – exacerbating fears that the North/South divide is widening.

Amid growing calls for the UK to seriously consider adopting an industrial policy to support those sectors of the economy with real international growth potential, there is increasingly a case for a credible regional economic policy as well.

:: Andrew Hebden is head of business at The Journal