Next year will be tough - warning

Dec 23 2009 by jez Davison, Evening Gazette

BUSINESS leaders are predicting a tough year to come for Teesside firms after official figures showed Britain was still mired in recession.

The UK economy shrank by 0.2% between July and September, the Office for National Statistics said yesterday.

Experts had predicted a 0.1% third-quarter fall but a bigger-than-expected drop in output for the UK’s powerhouse services sector dragged the economy lower.

The gloomy figures confirm a sixth successive quarter of recession, with the UK’s loss of output since the slump began last year now standing at 6% - on a par with the decline at the beginning of the 1980s.

Local analysts say a W-shaped recovery - during which a return to growth is followed by another fall in output - is a distinct possibility.

Andrew Priestley, stockbroker with Redmayne Bentley - which has an office in Stokesley - said: “Quantitative easing and low interest rates have created a new appetite for risk. However, longer term the domestic balance sheet is precarious, with unprecedented borrowings and a reliance on negligible growth in a GDP skewed heavily towards financial and support services.”

The North East Chamber of Commerce (NECC) said it expected growth and confidence to remain fragile throughout 2010.

But Ross Smith, NECC’s head of policy and research, said the emerging energy sector could be “a leading force” for the local economy.

“There are opportunities out there to build a huge industry for Tees Valley - although it’s not going to happen overnight,” he said.

The revised GDP figures come as new research from the TUC showed the number of people spending their second successive Christmas on the dole has doubled to more than 200,000.

The TUC warned that the number of long-term claimants will continue to increase into the new year.

Kevin Rowan, TUC Northern Regional secretary, said many people were finding new work quickly on Teesside but some were having to take on menial jobs to generate an income.

Latest figures show unemployment in Tees Valley has risen to 25,786. Nationally the jobless count has hit 2.49million - the highest level since early 1995.