Two key economic reports were published yesterday: The Office for Budgetary Responsibility (OBR) released its latest forecast on the UK economy, while in the North East an assessment of the possible impact of the recent Spending Review on the region was issued.
The OBR report forecasts faster growth than previously expected in 2010 of 1.8%, followed by growth of 2.1% in 2011 (slightly slower than previously predicted). These forecasts suggest a ‘double-dip’ recession is particularly unlikely. It has also revised expectations of public sector job losses in the next four years from 490,000 in June to 330,000. Unemployment is expected to grow to 8% next year, but fall back after that.
The Chancellor used his statement in response to this to announce reform of rules for controlled foreign companies, a lower 10% corporate tax rate on profits from newly commercialised patents from 2013, and a cross-Whitehall ‘growth review’ to report alongside Budget 2011 in March, which will assess how Government can better contribute to business growth. This will include improvements to the planning system and employment law, and more support for export and inward investment. The OBR report can be read here, while the Chancellor’s response can be seen here.
Meanwhile, One North East published a report conducted by St Chad’s College, Durham University, which forecasts 49,000 potential job losses in the region following the Spending Review, including 20,000 in the private sector. Every 1% increase in exports could offset 12% of job losses, but the report warns there is a mismatch in skills between those in the public sector who may lose their jobs and the requirements of businesses. Details of the report, entitled Mind the Gap, are here.
NECC welcomed the OBR report as further evidence of the growth opportunities for the private sector, and the Chancellor’s review, which echoes the economic recovery test called for in our Manifesto 2010. The Mind the Gap report lays bare the scale of the challenge to ensure this is reflected in the North East, and gives further weight to NECC’s calls for greater emphasis on backing exporters, and ensuring appropriate re-training opportunities are available to public sector workers.
To give your view on these issues, leave a comment on this blog or email email@example.com.