1. “Closing the Gap” Economic Context & Outlook South Gloucestershire Partners’ Conference 7 th March 2014 Nigel F Jump Executive Director & Chief Economist, Strategic Economics Ltd www.strategiceconomics.co.ukwww.strategiceconomics.co.uk nigel@strategiceconomics.co.uk nigel@strategiceconomics.co.uk www.strategiceconomics.co.uknigel@strategiceconomics.co.uk Visiting Professor in Economics, University of Bath & University of Plymouth

2. Global recovery underway … EZ area out of recession … but still restructuring debt China no longer slowing … but adjusting demand & debt US recovery underway … but facing ‘default’ & ‘tapering’ Still in downturn 2013 UK Q4 Real GDP still 1.3% < 2008 Q1 peak December 2013 manufacturing still 9.1% < peak Still many issues growth versus debt … UK ratios no better by 2018+ housing versus trade … barriers to rebalancing ‘fuzzy’ guidance … tapering, budget & elections

3. OBR Forecasts : December 2013 201320142015 Growth (%ch yoy)1.42.42.2 employment1.41.00.3 productivity0.01.41.9 Inflation (%ch yoy)2.82.62.3 Unemployment (%)7.97.67.1 PSND/GDP (%)73.975.578.3 Already wrong for 2013 … & 2014! 2013: growth 1.9%, inflation 2.6%, unemployment 7.6% growth borrowed? slow growth forever? “Ultimately, productivity-driven growth in real earnings is necessary to sustain the recovery.”

4. MPC unemployment target - scaring horses vs blowing bubbles - difficult SW trend Blue UK Red SW

5. hours, flexibility & composition part-time, public & flexible settlements

6. Sustained recovery needs productivity boost to raise real household income per head … & that needs investment-led growth: innovation, skills & market rebalancing

7. SW consumer-led recovery looks real

8. South Gloucs Economic Structure 2012% Local vs UK Agriculture, forestry & fishing0.5 -0.2 Production19.5 +4.4 of which manufacturing16.7 +6.3 Construction 6.7 +0.3 Distrib, transport, accom & food 16.1 -2.1 Finance & insurance5.1 -3.5 Business services10.6 -1.1 Information & communications6.7 +0.2 Real estate11.5 +0.9 Public admin, education, health20.9 +1.9 Other servs & household activities 2.4 -1.0 Strengths & weaknesses.. – rebalancing supply against demand structure?

9. South Gloucestershire: Issues … maintaining/building relative success … pulling up the relative laggards “WoE w/o Bristol” – 2012 GVA £15bn£23,132 per head relative UK index 108.6+15.4pts since 1997 Business stock proportionately low (Eng Av) & lowest (WoE), lowest new firm formation, lowest self-employment, lowest skills ratio, highest employment rate & job density. Claimant Count – January 2014 No.% rateyoy ch S Gloucs2,6101.5-0.6 WoE16,1022.3-0.8 SW67,6772.0-0.7 UK1,242,9123.0-0.9

10. South Gloucestershire: Drivers - Investment, Innovation, Skills, Entrepreneurship, Competitiveness Rebalancing - Expenditure & sectors, Inward investment & exports, Finance & government Is South Gloucestershire ready for the marathon recovery? weight - debt & dependence fitness - productivity (absolute & relative) stamina - real investment/incomes Confidence - Aspiration, Access, Agglomeration & Action who do you compare with … aim at?

11. the outlook Blue muddle through, OBR/long-term trend Red 90-00s aberration, permanent damage => next crisis Green rebalancing is real … lost years worth it Merge the 3 - whither Sth Glos? UK Real GDP Growth

12. Strategic Economics Ltd “bespoke advice & analysis – all your economics needs”  professional economics & analysis (PEA)  strategic evidence & advice (SEA)  technical evaluation & appraisal (TEA) current clients:  businesses, professions & business organisations  LEPs & local authorities  the media & academic institutions  social/community networks & enterprises www.strategiceconomics.co.ukwww.strategiceconomics.co.uk nigel@strategiceconomics.co.uk www.strategiceconomics.co.uk