Concept

Annual North-East Economic Forum 2006

‘The North-East in the Global Age’

Traditionally, the debate about regional policy in Britain has focussed on the relative under-performance of declining regions and sectors of the British economy in comparison to more affluent geographical areas. The extent of the gap in the rate of growth between ‘north’ and ‘south’ in the 1960s and 1970s justified successive waves of government intervention: industrial subsidies, interest-free loans, enterprise zones, and infrastructural investment.

Thirty years on that debate has evidently been transformed; it is clear that these interventions failed to achieve any discernable improvement in the relative economic performance of the North-East economy.

Still more fundamentally, it is increasingly evident that making comparisons within the UK is an incorrect premise for such regional policy debates to continue. In a diverse, flexible national economy, the North-East competes as much with other regions of Europe, and other continents of the global economy, as it does with the south of England.

Yet this European and global perspective on the North-East’s economic future has been largely missing from recent debates in the region.

This year’s North-East Economic Forum (NEEF) annual conference seeks to provide it. The event will focus on the economic relationship between the North-East and the rest of the European Union, drawing on research by One North-East, the University of Northumbria, think-tanks such as Policy Network and Reform, and other academic institutions.

The aim is three-fold:

1. First, to understand where the North-East performs well in relation to other EU regional economies, identifying sectoral strengths and weaknesses, and the ingredients of high performance: skills, infrastructure, innovation, R&D, science and investment in public services, as well as dynamic product, capital and labour markets.
2. Second, it will address how the economic challenges facing the North-East in relation to Europe are likely to evolve in the next twenty years. The pressure on older manufacturing industries is likely to further intensify, but there is some evidence that new service industries such as call centres are also losing comparative advantage.
3. Finally, the event will consider what the North-East can learn from the rest of Europe in determining how it competes in the global economy. The Nordic countries have created active and adaptable labour markets. The German lander has invested heavily in new infrastructure. The French are experimenting with new industrial policies. The European Commission itself is devising new policies such as the Global Adjustment Fund to help re-skill workers who lose out in the cycle of economic change. There is much scope for mutual learning and policy emulation.

The North-East should embrace these developments, not be separate from them. It needs a new institutional and policy agenda for the 21st century, bringing together all the key stakeholders in the region. If it wishes to prosper in the global economy, the North-East needs to use Europe as a bridge to the rest of the world.

The North-East, of course, has key sectoral strengths on which it can build: food processing, customer service centres, digital technology, digital media, mechanical and precision engineering, and plastics processing. Indeed, the region has over 500 global companies creating over 75,000 jobs.

Nevertheless the North-East still faces major challenges:

• Based on GDP per head, the North-East is below European average levels by around 13% for the EU15 and 5% for the EU25.
• The region has nearly half of its jobs in manufacturing (14%) and the public sector (32%): yet manufacturing jobs are steadily disappearing across the EU, and public sector jobs are vulnerable to the imminent slowdown in public spending across the UK.
• The North-East has relatively few businesses, and low levels of entrepreneurial activity.
• The region’s trade is small, and it is predominantly closed to the world economy.
• This economic under-performance is exacerbated by lower employment, weaker productivity, a high proportion of workless households, a smaller proportion of highly qualified workers, skills shortages, and lower life expectancy.

This NEEF Conference will take forward the debate begun at last year’s ground-breaking forum, but frame it in the context of the European and global challenges facing the North-East by 2020.

It will combine detailed empirical analysis and presentations about the key future challenges; contributions from leading politicians and experts both from the UK and the EU; the event will also provide a platform for key figures in the North-East business community.

The purpose of NEEF is to pose tough questions, re-state dilemmas and pursue robust policy solutions. That is why the 2006 Conference will, for the first time, seek to define the challenges facing the North-East from a European and global perspective, breaking new ground in the regional policy debate.