The latest Chamber economic survey launch has revealed North East companies are facing an increasingly difficult time with the furlough scheme masking looming unemployment problems.
Speaking to members about the results Jonathan Walker, Chamber director of policy outlined the precarious position of the North East economy due to the impact of the pandemic.
He said: “Our members reported their main barriers to success were the recession created by lack of demand. We also found an increased level of uncertainty around Brexit with concerns surrounding the type of deal yet to be secured with the EU and the potential paperwork and barriers which may result. Other difficulties in the survey were due to an inability to access Government support because of eligibility issues.”
Conducted in association with Durham University Business School, Professor Richard Harris from the University also spoke at the launch on the theme of North East productivity and levelling up.
His research has shown London is the most productive part of the country (in terms of total factor productivity – i.e., the productivity of all factors of production, not just labour) with the North East total 60% of the London rate. In terms of scaleup firms (defined as those firms achieving 20% p.a. average growth in turnover over 2013-18 that had 10 or more employees and/or £15m in turnover in 2013), labour productivity in the North East LEP area was 17% of the London productivity level and Tees Valley LEP’s figure was 12%.
In respect of Covid-19 Professor Harris outlined there will be some major issues that impact on productivity including supply chain problems with lack of access to usual suppliers, reduced demand and cash-flow or funding problems.
His findings also indicated there is also likely to be lower investment in innovation, research and development and process innovations, reduced exporting and more on-shoring.
He said his findings showed clearly foreign-owned businesses in the region, which exported were significantly more productive than UK-owned companies without any international trade.
This led on to his views of Government’s levelling up promise. He said: “Levelling up is not about making all areas of the country equal; it’s more about helping our region to increase its own rate of growth. We need to unlock the North East’s potential to make our economy more successful so it can be higher in relation to London’s economic base.”