The North is still in recession? Does anyone care?

A couple of weeks ago, the latest economic growth figures showed a 0.5% growth rate for the first quarter of 2011.  This follows a negative 0.5% growth rate for the final quarter of 2010.

Given the total lack of calamitous panic, I take it everyone is ok with 0% growth over six months.  People were primed to look for evidence of two quarters of negative growth which would have meant the UK was in recession again - cue stories about Osborne's economic package hurting too much, etc.

But...... What if parts of the UK are still in recession, but we just don't know it?

The ONS doesn't research regional growth figures quarterly, like it does nationally, but we do have some evidence about how the North is responding to the national picture.

According to the North West Regional Intelligence Unit, GVA growth in the North West and North East since 1990 has averaged 1.5% - six points behind the UK average of 2.1%!  (Yorkshire was only 4 points behind on 1.7%)  On this basis, arguably the last quarter of 2010 affected the NW and NE by growth of -1.1% and in the first quarter of 2011 at -0.1%, giving us two quarters of economic growth and our Northern Recession.

However, the fall in GVA during the last recession affected the region differently, losing 4.2% in the region against 4.6% nationally.  This comparison is only a 0.4% differential, meaning the North (just) scraped by with only 0.1% growth in 2011.  This is also using figures from before the Comprehensive Spending Review, which may be enough to wipe out that 0.1% glimmer of hope.

The CSR is the reason the NWRIU's economic forecast panel believes that there will be a 0.5% differential between the NW's and UK's growth, but probably not for a couple of years yet when the impact of the CSR really kicks in.

Probably.

As I frequently tell people, taking an accurate picture of the economic story in the UK is a relatively new phenomenon.  The new Labour Government in 1997 came in to power bringing in not just regional policies, but also the analysis to inform them for the first time.

Picture this - we are one of the 8 largest modern economies of the world and until the year 2000, we simple never bothered to count the size of our economy in the 9 different regions of the country.  It's the equivalent of the US saying "I know, just divide by 52 and that's what each State's economy is worth."  If it had been France we'd be laughing at them.

Yet, that is the situation we were in.  And it appears there is no sign of improving that situation.  The ONS produces a snapshot each year which tells us how each regional economy did over the last 12 months, but is it really too much to ask that as the UK figures come out we know how our region is doing as well?  Maybe then we would know how our region is really doing in the face of real economic change.

Personally, I still find it morally bankrupt that we as a developed nation are willing to know so little about how our economy works and monitor its progression.

I'm not advocating regionalism - I'm advocating a truly national approach.  You fix a house by tackling the individual problems in each room, not replastering all the walls when we need a new window in the bedroom and a new lightbulb in the bathroom.

SH