Our Economy – August update
The UK is – at last – experiencing a significant economic recovery. The latest forecasts from the IMF are for output to expand by more than 3% this year, remaining above-trend next year too. Unemployment has fallen to 6.5% and, when including the impact of population growth, the number of jobs is at a record high. Although encouraging, this follows a long and protracted recession and period of stagnation; GDP per capita remains slightly below pre-recession levels.
In a Council business briefing earlier this year, we reported that surveys of firms in the region were generally positive, but that we had yet to see much of an upturn in either the labour or housing markets in Newcastle. In the past three months, we have seen an improvement to both – with employment increasing strongly and house prices and sales improving a little (but remaining well below their pre-recession levels).
Looking forward, the economic and population forecasts for the UK point towards rapid jobs growth. Should Newcastle’s economy grow in line with the UK average, we should also expect to see strong improvements here too, with over 5000 jobs created in the next four years.
Clearly there are significant uncertainties and risks around these forecasts. On the downside, Newcastle is under-represented in some of the business sectors currently experiencing rapid growth nationally, while forecasts for the UK as a whole may prove to be too optimistic. But there is also the possibility that we could see more rapid improvement, with a closing of the ‘unemployment wedge’ with the rest of the country, which widened during the recession.