Regional Outlook Yorkshire

1
Regional OutlookYorkshire the Humber

• Tim Lyne
• tim.lyne_at_uk.experian.com
• 0870 196 8268
• December 2006

2
Overview

• UK developments and outlook
• Yorkshire the Humber developments
• Yorkshire the Humber outlook
• Sub-regional prospects
• Summary
• Questions?

3
UK Developments

• Last year was not a vintage one for the UK
  economy
• Important developments in early 2006
• Consumer recovery begins
• Manufacturing emerges from recession
• Upward drift in unemployment arrested
• Housing market rebounds
• Inflation remains above target
• Demand data have improved since start of year
• Oil price spike has passed into energy bills,
  though not into wages or general prices
• While worst appears over, lingering anxiety about
  interest rates, as Bank talks tough (August hike)

? Experian, 2006
4
Retail and manufacturing rebound
? Experian, 2006
5
Consumer focus

• Household recovery required to dig the economy
  out of the hole
• Xmas 2005 was better than expected, but was
  followed by relapse in early 2006
• The pre-World-Cup sales boost has not been
  sustained, albeit other with other indicators
  less strong (Footfall)
• Still underlying reasons for consumer unease
• Higher interest rates
• Heavy debt burden
• Cooler housing markets
• Possible tax rises
• Early signs of a poor 2006 Xmas
• Footfall analysis for Nov 06 down 7.3 per cent
  compared with Nov 05
• Consumer spending will remain subdued next year
  and fails to match the recent boom over longer
  term

? Experian, 2006
6
Outlook

• Recovery is expected to continue, though modest
  consumer spending prevents faster take-off
• Why?
• External environment is healthy, especially
  Eurozone
• Robust corporate sector
• No further interest rate hikes in prospect
• Inflation and interest rate environment benign
• UK growth prospects remain strong into medium
  term, though important structural shifts
• Consumer contribution diminishes over longer term
• Employment trends more muted too
• Immigration useful bolster to demographics and
  hence employment

? Experian, 2006
7
Upturn secure, but unspectacular
? Experian, 2006
8
Job creation slows
? Experian, 2006
9
Recent developments - Yorkshire the Humber

• After vigorous expansion in the first half of the
  decade, output and employment growth slowed
  sharply in 2005
• Growth was still estimated to be marginally ahead
  of the national average, but the region carried
  little momentum into 2006
• Recent data have shown few signs of recovery
• Activity and employment growth were sluggish in
  the first half of this year
• Unemployment rates have increased sharply
• Household sentiment has deteriorated, though
  house prices continue to grow more rapidly than
  elsewhere
• Overall the data suggests that the region is
  struggling, lying towards the bottom of the
  regional growth rankings

? Experian, 2006
10
Joblessness rising sharply
? Experian, 2006
11
Growth lags well behind UK average
? Experian, 2006
12
Structural features
? Experian, 2006
13
Structural features
? Experian, 2006
14
Regional forecast
? Experian, 2006
15
Gross Value Added
? Experian, 2006
16
Regional forecast
? Experian, 2006
17
Employment
? Experian, 2006
18
Regional forecast Yorkshire Humber
? Experian, 2006
19
Long-term outlook

• In the last cycle (1988-2004), Yorkshire the
  Humber grew at a slightly slower rate than the UK
  average
• This trend is expected to continue in the future,
  with growth averaging 2.3 per year
• The region clawed back share in jobs and output
  between 2001-4, but this will be partially
  reversed in the next cycle
• The GVA profile is boosted by productivity
  growth, while job creation slows below national
  trends
• The region remains in the lower half of the UK
  rankings, as a result of
• Weaker workforce growth
• Unfavourable industrial structure (albeit
  improving)
• Skills and qualifications gap (albeit improving)

20
Long-term outlook
? Experian, 2006
21
Demographic trends
? Experian, 2006
22
Yorkshire the Humber shares
? Experian, 2006
23
Sub-regional prospects
? Experian, 2006
24
City focus
25
Summary

• Yorkshire the Humber has slowed significantly
  and falls to the bottom of the regional growth
  rankings in 2006
• There is a slight improvement in prospects over
  the following two years, but the region lags well
  behind the UK mean
• Private services fail to sustain the strong
  growth of 2001-4, but manufacturing recovers
• Weak prospects for activity cause employment to
  decline
• The consumer outlook is particularly weak, with
  income and spending growth more muted than
  elsewhere
• Over the longer term, the industry mix, skills
  and demographics tend to curb employment
  opportunities
• and the region also suffers a slight loss of
  share of UK output and population

? Experian, 2006
26
Questions?

• tim.lyne_at_uk.experian.com
• 0870 196 8268