York-born Business Secretary Vince Cable tells The Press why he thinks the UK recession is well behind us
At some point over the last few months or so, we passed, without fanfare, one of the most important economic milestones of the last six years – the UK economy is now bigger than it was before the recession began in 2008. Today’s GDP figures are the official confirmation that we have now returned to pre-recession levels.
It has taken six years of hard work by British businesses and workers to recalibrate our economy. The recession was deep and the effects were felt throughout the UK, not least here in Yorkshire and the Humber, where the local economy, rather than growing, shrank by 3.8% between 2008 and 2009.
But it is also a source of encouragement. It is a reminder of how far we have come since the depths of the recession in 2009. Growth is up, investment is up, business is innovating more and unemployment is now at its lowest level for five years. In particular, a revival in private business is underpinning the UK’s recovery and creating jobs – over a million new jobs in the last year alone.
Yorkshire and the Humber is no exception. More than 41,000 jobs were created here between March 2012 and March 2014, showing the resilience and promise of the region.
The coalition government was formed to tackle an economic emergency. In 2010, the Government faced an enormous deficit as a result of a collapse of Government revenue after the failure of the banks under the last Labour Government.
Although there is much still to do, we are on track to eliminate the deficit in 2017/18. This has required painful and difficult choices to be made. But the country is now in a much safer position.
But deficit reduction alone was never going to be enough. That is why my Department has been working on a long-term plan to support companies growing and investing, job creation, and training our future workforce, from apprentices to PhD scientists.
At the heart of this has been a new industrial strategy for the UK, which my party the Liberal Democrats has championed across government, building a stronger economy and a fairer society. Industrial strategy is a long-term partnership between government and business, which attempts to work beyond the usual short-term political timetables. We want to make sure that the UK is able to earn a living through our world- beating industries such as cars in the Midlands or the oil and gas supply chain in Scotland, or the food, agri-tech and bio-renewables sector in Yorkshire and the Humber.
We aim to show that the UK is the right place to set up companies, invest and create long-term jobs.
We are also working to ensure that the workforce is ready to take the new opportunities being created as the economy recovers. Almost two million new apprenticeships have been started since we came to office in 2010 and we are investing in colleges like Askham Bryan College, to ensure everyone has access to the skills they need to succeed in the world of work, vocational and academic alike.
But there is more to do. Our recovery needs to be better balanced. Growth needs to be sustainable and we need every part of the UK to be firing on all cylinders, including in Yorkshire and the Humber. We cannot risk a repetition of the disastrous growth paths of the past when it depended on consumption financed by growing personal debt, depending in turn on inflated house prices. The emphasis must be on exports, investment and new technologies.
We must stop small and medium sized businesses being suffocated by the lack of bank credit. I speak to companies with world-beating ideas, including those in York and Sheffield, which cannot get the financial backing they need to seize the opportunities offered to them. So two years ago I launched a new British Business Bank to open up new avenues of finance for business who are struggling to get anything from the high street banks. We are also investing in British supply chains through the Regional Growth Fund. And we are promoting new green technology through the Green Investment Bank which my party has long championed and which we set up at the start of this government.
We also need to ensure that the UK can pay its way in the world economy, by boosting the exports of goods and services and bringing back production that went overseas over the past decades. Yorkshire and the Humber is leading the charge of engineering consultancy exports but as a country we still import far more than we export. Helping firms in Leeds, Harrogate and Middlesbrough to navigate new markets in China, South America or India is at the heart of our strategy.
Finally, the Liberal Democrats in Government are making sure that the economic recovery benefits everyone in the form of improved take-home pay. Despite the effect of the economic crisis on living standards, the Liberal Democrats have cushioned the impact by lifting 2.7 million people out of income tax all together and given a £700 tax cut to more than 20 million people. So far in Yorkshire and the Humber, wages grew by just 0.5% in the last year. Until this picture changes, we will not tire in our efforts to raise productivity, to ensure people have the skills and the opportunities to succeed in the world of work, and to expect their incomes to grow as a result.
Britain has world-beating scientists and while we have protected science investment, we recognize that in the past, Britain has not been as good as competitors like Germany in turning ideas into wealth creation. So we are investing in advanced technology centres which help commercialise cutting edge innovations in sectors like cell therapy, aerospace or advanced manufacturing.
The recovery is in full swing. The challenge now is to ensure that the good news story is one about every part of the UK and is sustained.over the long term.
City and economy expanding
THE growing economy in York is apparent in the physical growth of the city with numerous commercial and residential developments under way.
The latest GDP figures showed the value of the construction industry during the second quarter of 2014 grew by 4.2 per cent compared to the same period last year.
Martyn Harrison, chairman of York developer S Harrison, said: “Initially the upturn in the development sector was orientated towards London and the south east, but we are certainly seeing increased activity in the North.
“In York and Leeds we are at advanced stages of negotiation for a number of sites.
“We are cautiously optimistic that the recovery is sustainable, but it needs the banks to show willing to lend and there is a risk that shortages in construction skills will hamper delivery.”
The quarterly GDP growth of 0.8 per cent was driven mainly by a one per cent growth in the service sector.
Rachel Goddard, chairwoman of York Professionals, said: “Our members are seeing more activity and the professional services sector is recovering as skills in legal, financial, marketing, IT and HR are needed to sustain growth in other industries.
“Overall, it is great news for jobs and the local economy as many firms who needed to make cutbacks earlier are emerging stronger and are recruiting again.”
Talking to The Press about growth, Business Secretary Vince Cable highlighted Yorkshire’s food, agri-tech and bio-renewables sector as one of the UK’s world beating industries.
Dr Joe Ross, director of the Biorenewables Development Centre in York, said: “With the largest concentration of food and drink businesses in the UK, ten per cent of the UK’s chemical manufacturing and 11,200 agriculture, forestry and fishery businesses, it’s no surprise that Yorkshire’s bioeconomy is booming.
“We’re really excited about its potential as the bioeconomy could create or safeguard 145,000 jobs by 2025, and contribute £12 billion in GVA in the Yorkshire and Humber region.”
Simon Williams, North Yorkshire regional chairman for the Federation of Small Business, welcomed the GDP figures. He said: “In our survey two thirds of members are actively seeking to grow their business, showing how keen members are to take advantage of the steadily improving economic conditions.
“However, while figures show strong GDP growth, inflation and national debt are higher than expected. It is important that Government creates an environment that small businesses can thrive in; addressing issues such as late payment and access to finance.”
Suzanne Burnett, president of York & North Yorkshire Chamber of Commerce and managing director of Scarborough-based Castle Employment, said: “It certainly feels like we are in a much better place than 12 months ago.
“In my businessWe are definitely seeing more confidence in local markets with an upturn in the number and calibre of job vacancies.”
“We are also seeing businesses showing appreciation of the right people by offering them competitive salary packages that reflect their skill base.”