Mixed fortunes predicted but let's look for the potential

Jan 1 2009 by Iain Laing, The Journal

AT the dawn of a new year as heavy with challenges as any for decades, nebusiness asked some of the region’s business leaders and some of our favourite commentators to share their thoughts on what lies ahead and how to deal with courage and traditional North East pragmatism.

Ian Shepherdson, leading Wall Street and City economist, currently living on Tyneside

BRACE yourself. This year is going to be awful, as the full horror of the consequences of the credit bust manifests itself in unemployment figures.

Almost every sector of the economy will shrink this year, with particularly rapid declines in consumer-facing businesses whose customers typically rely on credit to finance major purchases.

But manufacturers and business service providers will feel the pain too, as companies seek to reduce costs and slash their capital spending plans. The surge in joblessness will bring back very painful memories of the early 1980s, forcing the Government into further measures to limit the depth of the downturn.

The package of measures announced in the Pre-Budget Report is simply not big enough to make a real difference.

Not everyone will suffer through the recession, though, and the good news for people and businesses with variable rate debt is that their payments will drop further as the Bank of England cuts interest rates almost to zero and leaves them there for an extended period.

Eventually, the combination of vastly increased public spending and super-cheap money will start to turn the economy around, but it’s anyone’s guess as to when it will happen. It’s a very painful way to learn the lesson that all booms end in busts, even when the Prime Minister says this time is different. They all say that, and it never is.

Keith Hann, City PR and Journal columnist living in Northumberland

RECESSIONS are like wildfires: painful if you are caught in one, perhaps even fatal, and leaving a trail of destruction in their wake.

Yet from the charred earth will ultimately spring recovery and even more vigorous growth.

As a specialist in drafting profit warnings, I have mixed feelings about 2009, rather like an undertaker reading Press reports of an impending flu pandemic.

As a sentimental old reactionary, I naturally regret the expected collapses of some fine old institutions.

But while it is obviously ghastly for those whose jobs are on the line, the major corporate casualties up to now have been the walking dead – businesses that had failed to adapt to their changing market place.

The important thing is to ensure that the next generation of growing enterprises does not also go up in smoke.

The best contribution we can all make to that end is to keep acting and spending normally.

Every piece to camera by Robert Peston should be followed by that old Crimewatch disclaimer, don’t have nightmares.

It may not be as bad as we have been led to fear. And if it is, keep reminding yourself that it is going to do us good in the long run.

Nicholas Craig is a partner at Watson Burton law firm in Newcastle

EVERY year is full of exciting, untapped potential – 2009 could surprise us all by turning into one of the best years yet.

England could win the Ashes, for a start.

I could lose those few spare pounds that mar an otherwise athletic physique.

The Highways Agency could do a U-turn on the dualling of the A1 and Andy Murray could win Wimbledon. Anything is possible at the beginning of a fresh new year.

My hopes for 2009 are that things will get considerably better (as the song almost says) for us all. Worry is destructive and isolating.

We have an embarrassing richness of reasons to feel cheerful in the North East. In the freezing depth of January, the place is still spectacular.

Walking on the beaches, moors, around city centres and along rural lanes is an absolute treat – a luxury we can indulge in whatever else is happening in the recession-riddled world.

There will be a huge amount to enjoy in 2009, from sunshine (occasional) to football trophies (less likely).

Have a happy year from beginning to end.

Dinah Bennett, board director of Women into the Network, Centre for Entrepreneurial Learning, Durham University

LET us all take a much more strategic and long-term view of our businesses and stop talking ourselves into an even deeper recession.

Women-owned businesses are doing well in this region. However, we cannot be complacent.

Business support services must gear up for a greater number of women in their client base.

Gordon Brown has stated that the key factor in increasing the UK’s business start-up rate is getting more women to start their own businesses. To enable this growth we must have appropriate policy and support initiatives.

Women Into the Network supports business initiation and growth through its advocacy and by signposting women to the many support agencies we have in region which understand the differing needs of the diverse range of businesses owned and run by women.

Look out for the launch this year of a new research and policy unit which the Universities of Durham, Newcastle, Northumbria and Teesside have set up on gender and entrepreneurship – the first time regional universities have done such a thing.

This unit will address key issues and raise the profile of the excellent work in this field conducted in our region but ultimately will serve to support women-owned business more effectively.

This is good news so let’s share it and sing of our successes. Happy New Year!

Jonathan Grubin, 17, Tyneside multi-media entrepreneur

IT’S been a lot of work running MiniG Media alongside schoolwork, but I’m planning on taking a business management course at university in 2009.

I can’t say I’m looking forward to June’s exams, but the rest of the year is looking exciting enough.

I have a lot of other plans for next year: a couple of projects have been in development since mid-2008, and I’m really looking forward to launching them soon.

Some pretty cool things are going to be happening to livenewcastle.co.uk, in particular.

It’s going to be my biggest project yet, so I’m expecting to come across a lot of hurdles in the months before launch, but I’m keen to deal with them as they arise.

Hopefully, I’ll also come up with some other exciting ideas in 2009.

It’s a shame that I don’t have the time to do everything I want at the moment, but I have a lot of faith in the two or three big projects that I’m focusing my energy on.

For me, 2009 is going to be about getting these projects off the ground, and changing MiniG’s core business. I’m keeping confident and optimistic about the future, and looking forward to the surprises which will undoubtedly pop up along the way.

The year 2009 is going to be an important one economically, but hopefully I’ll emerge on top.

Alan Hall, region director of manufacturers organisation EEF

MY crystal ball is no better than yours but my piece of crystal is particularly foggy at the moment. Who can predict next year but here goes ...

Unfortunately, I think the year will start badly.

I can only see a spate of job loss announcements and cut-backs. It is hard to predict the scale of this but I do not find it hard to believe that we will go from around two million unemployed as I write this article to 2.5 million people without work by next summer.

So will there be an upturn and when will it come? For absolute certain this economic malaise will end, things will turn around and we will be able to put this tough, sad and difficult phase all behind us.

There will be new and growing businesses in our region, with fresh employment opportunities for those with the right skills, ability and aptitude.

As to timing, I struggle to see how this steep slowdown will be over by next summer.

My money for the upturn is on spring 2010. I also am certain that manufacturing will form a vitally important part of the upswing when it does occur.

Manufacturing in our region is currently, and in my view will remain, a key major economic contributor to the wealth, vibrancy and success of our region.

Kevin Rowan, regional secretary, Northern TUC

TOUGH is a word that may be used a good deal in 2009.

The first half of the year will witness dramatic job losses on a scale we haven’t experienced since the clothing and textile sector haemorrhaged thousands of jobs in the 1990s. It is likely to be towards the end of the year before we begin to enjoy some of the rewards in our growth sectors that have been nurtured for the last few years.

Oil and gas, renewable energy and the chemical and process industries are all a bit more cautious today than they were a year ago.

Our ambition to tackle poverty and economic inclusion will be greatly challenged, the focus will be on holding what we have.

Key challenges will be to ensure that we maximise the Government commitment to invest public spending in infrastructure projects in a way that enables the region to improve its competitiveness and to support individuals to develop their skills and competencies so that the North East leads not follows the rest of the country out of recession.