Transcript Add title - St. Joseph's Boys' High School, Newry

Responding to the challenge
11th December 2012
Neil Gibson
Director: Oxford Economics
Newry & Mourne Enterprise Agency
Agenda
Global economy still fragile
NI tracking below the UK average
Newry – unique location offers opportunity (and risk)
Key forecast questions
Summary: Making choices
2
Global economy still fragile
Global economy slowing again
World GDP (year-on-year), 1995 - 2015
World trade % growth (year on year), 1991 - 2022
World: GDP growth
% year
6
15
Forecast
Forecast
5
10
4
3
5
% growth
2
1
0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
0
-1
-2
-5
-3
-4
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
-10
Source: Oxford Economics
Source: Oxford Economics
The world economy emerged from recovery in Q4 2009, with
4 quarters of consistent growth, but 2011 saw a slowdown
that is set to continue into 2013. . .but no return to recession
4
Eurozone debt problems causing global problems
Discretionary fiscal tightening, 2011-13
% of GDP, total 2011-13
Germany
France
UK
Eurozone
Italy
Greece
BRICs: Industrial output
Ireland
% year (3 month average)
Portugal
China
20
Spain
15
0
2
4
6
8
10
India
10
Source : Oxford Economics/ Haver Analytics
5
0
Brazil
-5
-10
-15
Russia
-20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Haver Analytics / Oxford Economics
5
UK – could there be a triple dip?
GDP (% growth q-o-q), UK, 1998 - 2022
2.0
Forecast
1.5
0.5
0.0
-0.5
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
GDP % growth, q-o-q
1.0
-1.0
-1.5
-2.0
-2.5
Source: Oxford Economics
6
Oxford
forecast 0.1% growth
in 2012Q4
Labour market, surprisingly, performing rather well
Workforce jobs and employee jobs, UK, 2000 – 2012
33
Workforce jobs only 0.5% below peak
workforce jobs, mns
32
31
Employee jobs 2% below peak
30
Workforce jobs
29
Employee jobs
Employee jobs, UK, December 2011 – June 2012
28
27
Top 5
26
Source: ONS, Workforce jobs, Seasonally adjusted
Mar-12
Jul-11
Nov-10
Mar-10
Jul-09
Nov-08
Mar-08
Jul-07
Nov-06
Mar-06
Jul-05
Nov-04
Mar-04
Jul-03
Nov-02
Mar-02
Jul-01
Nov-00
Mar-00
25
Accommodation and food
Manufacturing
Profl, scientific and tech activ.
Information and comms
Real estate activ.
Bottom 5
Human health and social work
Public admin and defence
Other service activ.
Construction
Wholesale and retail trade
Total
Change trough, current
(000's)
%
86
4.6
70
3.0
52
2.7
26
2.5
23
6.6
Change trough, current
(000's)
%
-8
-0.2
-10
-0.7
-10
-1.7
-30
-2.6
-85
-1.9
169
0.6
Source: ONS,
Workforce jobs, Seasonally adjusted
7
NI tracking below the UK average
Labour market lagging the UK. . .
Workforce jobs, UK & NI, March 2007 – June 2012
104
Index (2007=100)
102
100
NI
98
UK
96
Source: ONS, Workforce jobs, Seasonally adjusted
Note: March 2007 = 100
9
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jun-09
Mar-09
Dec-08
Sep-08
Jun-08
Mar-08
Dec-07
Sep-07
Jun-07
Mar-07
94
Where is NI underperforming?
Number of jobs below UK trend, NI, trough - current
Source: ONS, WFJ
Note: Low = June 2011 and most underperforming sectors
are shaded in pink
10
120
115
110
105
100
95
90
NI
85
UK
Source: ONS, Claimant count
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
Mar-07
Sep-06
Mar-06
Sep-05
80
Mar-05
000s
0
0
-6
1
1
1
-8
0
-2
1
1
-2
-6
-1
0
-2
-3
1
-2
-28
Index (Mar 05=100)
Agriculture, forestry and fishing
Mining and quarrying
Manufacturing
Electricity, gas,& steam
Water supply; sewerage, etc
Construction
Wholesale and retail trade
Transportation and storage
Accommodation and food service activities
Information and communication
Financial and insurance activities
Real estate activities
Professional services
Administrative and support service activities
Public administration and defence
Education
Human health and social work activities
Arts, entertainment and recreation
Other service activities
Total
Self – employed jobs, UK & NI, 2005 - 2012
Unemployment now amongst the highest in the UK
Claimant Count rate, UK regions, average 2007 & Sep 12
6.0
Sep-12
5.0
Avg 2007
4.0
%
3.0
2.0
1.0
Change in unemployment, Top 10 LAD’s, Trough - Current
Source: ONS, Claimant count
South East
South West
East
East Midlands
UK
Scotland
Wales
London
North West
West Midlands
Yorkshire and The
Humber
North East
Northern Ireland
0.0
LA
Region % change
Top 10
Magherafelt
NI
Banbridge
NI
Dungannon
NI
Ballymoney
NI
Cookstown
NI
Craigavon
NI
Castlereagh
NI
Newry and Mourne
NI
Armagh
NI
South Gloucestershire
Source: ONS, Claimant Count
11
SW
401%
335%
324%
287%
285%
274%
273%
272%
270%
238%
Jobs outlook remains service sector focussed
Sectoral employment growth, NI, 2012 - 2022
Agriculture, forestry and fishing
Mining and quarrying
Manufacturing
Electricity, gas,& steam
Water supply; sewerage, etc
Construction
Wholesale and retail trade
Transportation and storage
Accommodation and food service activities
Information and communication
Financial and insurance activities
Real estate activities
Professional services
Administrative and support service activities
Public administration and defence
Education
Human health and social work activities
Arts, entertainment and recreation
Other service activities
Total
2012 - 2022
(000's)
%
-0.8
-2.5%
-0.4
-27.2%
-3.7
-4.6%
0.2
13.0%
-0.2
-3.5%
3.5
5.6%
8.1
5.7%
4.5
13.9%
4.9
10.6%
1.9
11.7%
0.0
-0.1%
1.2
17.1%
5.2
21.1%
8.8
19.5%
-6.8
-10.4%
-3.4
-4.8%
1.9
1.6%
2.9
17.3%
2.9
14.6%
30.7
3.8%
Source: Oxford Economics
Note: includes self employment, all negative growth is shaded in pink
12
A long road back
Total employment, Northern Ireland, 1998 - 2025
880
Forecast
860
Employment (000s)
840
820
800
Loss of 49,800
jobs
780
760
No return to
peak forecast
before 2025
740
720
700
680
Source: Oxford Economics, QES
13
2024
2022
2020
2018
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
660
Newry – unique location offers opportunity (and risk)
Unemployment problems for Newry & Mourne
Monthly unemployment, Newry & Mourne, March 2011 – October 2012
8,000
7,000
Unemployment
6,000
Unemployment
roughly
equivalent to
level in 1998
Q3
5,000
4,000
3,000
2,000
1,000
1990Q1
1991Q3
1993Q1
1994Q3
1996Q1
1997Q3
1999Q1
2000Q3
2002Q1
2003Q3
2005Q1
2006Q3
2008Q1
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
0
Source: Nomis Claimant Count
15
Who is unemployed?
Unemployment by age group, 2012
Under 18, 1
Aged 50+, 636
Aged 18-24, 951
Unemployment by duration, 2012
Managers, 66
Professionals, 118
Assocate professionals
& techincal, 144
Elementary, 958
Administrative &
secretarial, 215
Aged 25-49, 2,132
Skilled trades, 844
Process, plant &
machine ops, 588
Source: Nomis Claimant Count
Personal services, 246
16
Sales & customer
service, 541
Matching skills to job demand a challenge
Unemployment by sought occupation, 2012
Managers
2%
Elementary
26%
Professionals
3%
Assocate professionals
& techincal
4%
Administrative &
secretarial
6%
Skilled trades
23%
Process, plant &
machine ops
16%
Source: Nomis Claimant Count
17
Sales & customer
service
14%
Personal services
6%
An era of slow job growth ahead
Total employment, Newry & Mourne, 1995 - 2025
45
40
Forecast
Newry forecast to
create 2,300
additional jobs by
2022 (6%)...
...on back of 3,100
job losses between
2008 and 2012
(000s)
35
30
25
Source: Oxford Economics
18
2025
2023
2021
2019
2017
2015
2013
2011
2009
2007
2005
2003
2001
1999
1997
1995
20
Sectoral outlook reflects border location
Employment change by sector, Newry & Mourne, 1998 - 2022
1998 - 2008 2008 - 2012
Agriculture, forestry and fishing
Mining and quarrying
Manufacturing
Electricity, gas, & steam
Water supply; sewerage, waste management
Construction
Wholesale and retail trade
Transportation and storage
Accommodation and food service activities
Information and communication
Financial and insurance activities
Real estate activities
Professional, scientific and technical activities
Administrative and support service activities
Public administration and defence
Education
Human health and social work activities
Arts, entertainment and recreation
Other service activities
Total
19
-420
0
890
0
250
2450
2250
520
1080
150
160
140
410
940
-70
720
1160
120
200
10950
2012 - 2022
-420
120
-380
0
200
-1710
-380
220
-260
380
-120
-50
80
60
110
-480
-410
-40
20
-3060
Source: Nomis Claimant Count
Note: Top 2 performing sectors are shaded in yellow and bottom 2 performing sectors
are shaded in pink
-70
-30
110
0
100
110
690
350
310
80
-70
30
240
270
-120
-90
120
90
200
2300
Scaling the challenge
 A further 1,900 resident jobs would be required in Newry to match the Northern Ireland
resident employment rate
 A further 6,400 resident jobs would be required in Newry to match the UK resident
employment rate
 Residence based wages in 2012 were £403.90 on average per week in Newry - 4.9%
below the NI average, and 17.6% below the UK average
 Workplace based wages in 2012 were £401.60 on average per week in Newry - 5.4%
below the NI average, and 18.1% below the UK average
 Newry’s unemployment would need to fall by 2,700 people to get back to its 2007 level of
unemployment
20
Key forecast questions
Key questions
 Austerity – more to come?
 Will welfare reform impact?
 Will big changes to funding regime hurt?
 Can the export base grow sufficiently?
 Will the low skilled find work?
 Can a ‘rebalancing’ occur?
22
Austerity – more to come?: UK public finances in perilous state
Government gross debt stock % GDP (2011)
UK: Government expenditure and receipts
Slovakia
% of GDP
50
Finland
Germany
Forecast
48
Spain
Netherlands
46
Austria
Government
expenditure
44
UK
Belgium
42
US
40
France
Ireland
38
Portugal
Government
receipts
36
Italy
Greece
34
1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
Japan
0
20
40
60
80
100
120
140
160
180
200
Source: Oxford Economics
Source: Oxford Economics
UK debt per head estimated at £17,300 (UK debtbombshell .com)
Oxford Economics estimate closer to £20,000 per head
UK national debt increases £310,212 per minute (debt-clock.org)
By the end of this presentation approximately £12.5 million will be added to national debt
23
Austerity – more to come? Next CSR in NI likely to be tougher
Government balance (subvention), NI, 2003/04 – 2015/16
1.0%
-34.3%
-2.9%
-8.0%
-40.1%
-11.5%
Source: NI Executive budget report 2011-15, 7th March
2011.
Note: Real term estimates based on Treasury inflation forecast
which is 2.75% on average over the period 2010/2011- 2014/15
Government balance, £bn
Cash terms (£bn)
Resource DEL
Capital DEL
Total DEL
Real terms (£bn 2010- 11 prices)
Resource DEL
Capital DEL
Total DEL
Forecast
-6
-8
Balance /
subvention
-10
-12
-14
Source: Oxford Economics (2011 analysis)
• Debt stock rising and adding a bigger burden
• NI ‘case’ losing traction – other areas making a strong case
• Change of government could change strategy – but not that much
(‘blame the old regime’)
2015/16
2014/15
-4
• UK finances weakening and debt targets likely to be missed
24
2013/14
2012/13
2011/12
2010/11
2009/10
2008/09
2007/08
2006/07
2005/06
-2
2004/05
0
% change 2010 - 2011 to
2014 - 2015
2003/04
Departmental expenditure limits, NI, 2010/11 – 2014/15
Austerity more to come? Time to talk about big areas of spend
Identifiable expenditure by function, Northern Ireland (£m)
1. General public services
2. Defence
3. Public order and safety
4. Economic affairs
of which:
Enterprise and economic develoment
Science and technology
Employment policies
Agriculture, fisheries and forestry
Transport
5. Environment protection
6. Housing and community amenities
7. Health
8. Recreation, culture and religion
9. Education
10. Social protection
Total identifiable expenditure
Source: HM Treasury PESA
25
2010-11
410
0
1430
1630
370
70
240
290
650
250
880
3520
440
2750
7980
19290
Will welfare reform impact? – Short answer is yes!
NI and UK: Composition of gross disposable household
income (2010)
Self-employed income
Wage earnings
Net property income
Social benefits less contributions
Net current transfers
Taxes on income and w ealth
Gross disposable household income
Source: ONS, Oxford Economics
26
NI
18%
69%
10%
13%
4%
-14%
100%
UK
16%
84%
12%
6%
0%
-19%
100%
pp diff
2
-15
-2
6
4
5
0
Will welfare reform impact? – But surely reform is inevitable?
Benefit claimants per 1000 working age population people, UK regions, 2011
Claimants per 1000 working age
population
IB
ESA
DLA
IS
JSA
Source: DWP & DSD
NI Claimants
51900
24400
184200
82800
59900
NI
46
22
165
74
54
Newry & Mourne (claimants per
1000 working age):
IB:
ESA:
DLA:
IS:
JSA:
27
UK
49
19
87
45
39
46
23
171
77
62
Will big changes to funding regime hurt – again short answer is yes!
Total employment – corporation tax scenario,
NI, 1990-2030
Total employment
NI 1990- 2030
Indicative estimates of potential SFA job loss
950
Forecast
Employment (000s)
Deadweight
25%
50%
75%
Jobs 'lost' over
next 10 years
(000s)
45
30
15
900
850
800
750
Base
700
Source: Oxford Economics
Note: A review is underway
by Invest NI to better
understand possible impact
This assumes a complete
end to SFA
Assumes approximately
6,000 jobs safeguard or
created annually
28
Central
650
Source: Oxford Economics
Note: published July
2011.
Baseline has changed
Lower corporation tax
= 58,200 additional
jobs by 2030
Can the export base grow sufficiently? This will be very very tough
Service exports, NI, 2000 - 2011
Manufacturing exports, NI, 2000 - 2011
300
6000
250
5000
200
4000
£m
£m
7000
3000
150
100
2000
1000
Manufacturing
Services
50
Source: Manufacturing sales and export survey (current
prices)
Exports, UK, 2000 - 2022
15
Forecast
Source: Exporting NI services (current prices)
Concern over
services exports
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
% growth
10
5
-5
-10
29
Source: Oxford Economics (2009 prices)
Note: dashed line in
both charts indicates
sectoral
reclassification to
SIC07 from SIC 03
2010
2009
2008
2007
2006
2005
2004
0
2003
2010/11
2009/10
2008/09 (SIC
03)
2008/09 (SIC
07)
2007/08
2006/07
2005/06
2004/05
2003/04
2002/03
2001/02
2000/01
0
Can the export base grow sufficiently? Significant potential
Imports, selected global emerging economies, 2022
China
India
Egypt
Russia
Brazil
Indonesia
Vietnam
Phillipines
Nigeria
Bangladesh
Sri Lanka
Iraq
Mongolia
Total
30
Source: Oxford Economics
Note: Ranked in order of value
Imports, 2022
0.01% (£m)
226
72
65
35
26
15
14
9
7
3
2
1
1
475
If NI could provide
0.01% of imports to
these emerging
economies, it
would be worth
£475m (equivalent
to 1.7% of GDP,
though actual
impact would be
smaller due to
import content)
Can the export base grow sufficiently? Euro weakening possible
Exchange rates
£1 = $1.60
£1 = €1.24
UK: Exchange rates
2.2
Forecast
US$/£
2.0
11/12/12
Source: xe.com
1.8
1.6
Signals improved
export
competitiveness
1.4
1.2
Euro/£
1.0
1990 1993 1996 1999 2002 2005 2008 2011 2014
Source: Oxford Economics
31
Where will the low skilled work? Low skills of inactive a major challenge
NI: Working age population economic activity status and benefit claimants by highest
qualification (2011)
Total
(000s)
No quals
Other
quals
Level 1
Level 2
Level 3
Level 4+
Employed
Unemployed
Economically inactive
Long-term sick
Looking after family & home
Early retired
Student
Other
775
62
317
90
73
41
86
27
16%
26%
54%
49%
29%
25%
41%
4%
4%
2%
3%
0%
0%
0%
8%
14%
10%
12%
14%
9%
10%
15%
21%
9%
9%
14%
39%
15%
22%
20%
13%
14%
14%
20%
27%
34%
16%
11%
14%
29%
7%
7%
Economically inactive - w ant to w ork
Economically inactive - do not w ant to w ork
51
267
-
-
-
-
-
-
Employment rate
67%
40%
73%
78%
81%
47%
84%
Benefit claimants (latest)
Jobseekers allow ance
Income support
Incapacity benefit
Employment and support allow ance
Disability living allow ance
61
72
65
47
192
48%
48%
55%
1%
3%
5%
14%
9%
17%
16%
14%
6%
17%
17%
8%
4%
9%
9%
Source: LFS, DSD
32
Source: LFS
Construction
Health
Agriculture
Manufacturing
0%
Real estate
Electricity, gas,& steam
Finance
Mining & quarrying
Other service
Info & comms
Professional
Water supply; sewerage, …
Arts, entertainment
Education
Public admin & defence
Admin & support
Accommodation & food
Transportation & storage
33
Wholesale & retail
% employed
Real estate
Water supply;
sewerage, etc
Transportation &
storage
Arts, entertainment
Admin & support
Accommodation &
food
Construction
Agriculture
Health
Manufacturing
Wholesale & retail
% entrants
Where will the low skilled work? Which sectors offer low skilled work
Entrants to employment with no qualifications by sector, NI, 2009-2011
30%
25%
20%
15%
10%
5%
0%
Range of sectors
‘off limits’ to
those with no
quals...finance,
professional
servs, info &
comms
20%
% employed stock with no qualifications NI, 2009-2011
18%
16%
14%
12%
10%
8%
6%
4%
2%
2 out of every 3
workers with no
qualifications are
employed in
retail,
manufacturing,
agri, health and
construction
Can a rebalancing occur? – agri food an area of potential
Employment in agri – food, NI, 1998 - 2022
Employment in agri – food, NI, 2010 -2012
63
Forecast
2010 - 2012
000s
%
Agriculture
Employees
0.1
0.7%
Self employed
-3.6
-14.8%
Total employment
-3.5
-9.7%
Manufacturing of food etc
Employees
-0.1
-0.4%
Self employed
0.0
6.2%
Total employment
0.0
-0.2%
61
57
55
53
51
49
Source: Oxford Economics
Source: Oxford Economics
34
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
47
1998
Employment (000's)
59
Can a rebalancing occur? – manufacturing a mixed bag
Employment in manufacturing, NI, 1998 - 2022
115
Forecast
110
3,700 less jobs by 2022 in
manufacturing sector
Employment (000's)
105
100
95
90
85
80
75
% growth GVA in manufacturing, NI, 1998 - 2022
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
70
6
Forecast
Source: Oxford Economics
4
2
£1388m additional GVA by
2022 in manufacturing sector
-2
-4
-6
-8
Source: Oxford Economics
35
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
%
1998
0
Can a rebalancing occur? - Commodity prices will impact
World agricultural products
Grain and oilseed prices, $ per bushel
18
16
Soybeans
14
12
10
8
Wheat
World: Oil, food and metals prices
6
4
160
Corn
2
F'cast
140
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source : Oxford Economics/Haver Analytics
120
100
World food prices
(2007=100)
80
World food prices near crisis levels:
Worst drought in more than 50 years in US
sent corn and soybean prices soaring also
droughts in Russia and other Black Sea
exporting counties
Shale oil could impact oil price
60
World base metal
(2007=100)
40
Oil price
(US$ pb)
20
0
1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
Source : Oxford Economics
36
Can a rebalancing occur? – Wages an issue
Average hourly compensation in manufacturing, selected countries, 2011
Sri Lanka
China
Mexico
Taiwan
Brazil
Singapore
UK (minimum)
Korea
Israel
UK (average)
France
Germany
0
5
10
15
Average hourly compensation (£)
Source: Bureau of labour statistics
37
20
25
Can a rebalancing occur? – public service will necessitate
Employment in public services, NI, 1998 - 2022
270
Forecast
260
250
Employment, 000s
240
8,300 less jobs
by 2022 in
public services
230
220
Source: Oxford Economics
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2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
210
Summary: Making Choices
Are we ready?
 Policy has changed in certain respects; new strategies with some overlap, though not
enough. Invest NI has been transforming and focus has shifted to exports and short term
job support
 Corporation tax debate lumbers on, decisions getting closer but is it too late?
 Legislative changes very limited
 Public sector changes are underway, but piecemeal and danger of ‘cheapest is best’
approach
 Welfare reform, regional pay and austerity all generated strong objections locally, but little
alternatives presented
 Longer term strategic challenges not prominent: pension crisis, elderly care, subvention
dependence
40
And at a local level?
 New powers
■ What is the plan?
■ What could you do if you had the powers?
 Close to existing business (issues, plans, concerns)
 Close to capacity and potential (site register, planning consents, USP of locations)
 Postulate an alternate income model – what rates / taxes could work (vacant rates,
eyesores, environmental legislation)
 Co – ordinate the agencies and the support that flows in (“total place”)
 P&L account for economic development in the area
 Could a jobs plan work – 2K minimum, 5K stretch target?? Co-ordinated jobs register for
the area – help ever business to get the staff they need – a no unfilled vacancies policy.
 Research – a ‘trace’ project of the young people and school leavers over last 5 years –
which subjects have mattered, what characteristics (beyond family background etc.).
What has worked for Newry people
41
What is required?
 Decisions on major policy choices
 Reform of tax raising policy: rates, water, corporation tax etc
 Public expenditure needs line by line expenditure review, no preconceptions over inhouse or out sourced
 Appropriate principles: cheapest does not always mean best value, competition does not
mean privatisation
 Recovery will be long and slow: growth should not be taken for granted.
 Creating jobs whilst spending less is not easy.
Make choices clearer: Have the debate!
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County Down
BT27 4AB
UK
Tel: 028 9266 0669
Fax: 028 9267 0895
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