Think Asia, think change

Think Asia, think change

Within a decade just 600 cities around the world could account for two-thirds of all the world produces. These cities – 200 perhaps in China – will be the North East’s and the UK’s new competitors. We must prepare for that, says Sarah Glendinning...

Christmas has been a wonderful time to reflect and give thanks for what has happened over a year - not just individually but for our colleagues, businesses and our region.

And the new year represents an opportunity to look forward; to look forward to achieving new goals, realising new aspirations both personally and professionally.

The refrain “how time flies” is often overused, but 2015 flew by and taking stock of where we find ourselves – our new normal - seems prudent now.

The world at large is changing - it’s a brave new world with big forces at work, competition intensifying and a fourth industrial revolution beginning - robotics, artificial intelligence, the very nature of work itself transforming.

There have been changes at home in the UK too - a new government with a new mandate no-one expected in May.

A changing UK, moving ahead with real devolution of real power, and an EU referendum on the horizon that could alter the UK’s future forever. 

Our 2015 economic recovery has firm foundations - one of the fastest growth rates in the G7, low inflation and 2m new jobs since 2011.

We expect, in the end, 2.4% growth in 2015 rising to 2.6% in 2016, and we now have a golden opportunity to move from recovery to a new era of prosperity across the UK.

Regionally we have seen growth and investment in our businesses, from the start of global production of the new Infiniti Q30 at Nissan, Reece Group breathing new life into the Armstrong Works and Hitachi formally opening for business at Newton Aycliffe.

We’ve seen investment increase in our digital communities and our professional services firms, not to mention the outstanding results for our higher education providers such as Gateshead College.

Commitment to investing in the low carbon economy continues across Teesside, and the opening of the National Biologics Centre in Darlington in autumn gave a welcome boost to an exciting area of global opportunity the region can be proud of.

Our £4bn visitor economy has seen new successes on large and small scales - the Rugby World Cup having a £43m direct economic impact, and the Land of Oak & Iron which will restore key heritage landscape along the River Derwent for example. 

And, continuing to improve the experience for visitors to the North East, we have the new Crowne Plaza Hotel in the Stephenson Quarter, and air passengers will benefit from the new £14m investment in the departure lounge at Newcastle Airport. 

So what will 2016 bring?

Regional devolution and the government’s drive to create a Northern Powerhouse represent opportunities to drive private sector growth and improve productivity in every region including the North East.

These areas will continue to dominate the agenda for many businesses in 2016. We must and will continue to work collaboratively across the region as a business community with our local authorities to drive the opportunities for economic growth devolution represents.

The recent Comprehensive Spending Review was good for longer-term investment in the economy; the government staying the course on deficit reduction, committing to industrial strategy and nurturing a vibrant business community, and this will impact decisions made in 2016.

Areas of interest for the North East include maintaining spending on infrastructure, ramping up housebuilding, and support for energy intensive industries and advanced manufacturing. 

Key for 2016 is ensuring we don’t reach tipping point where the cumulative burden of the living wage, apprenticeship levy and business rates risk hurting competitiveness.

Taking it back to a global perspective, however, one final thought for 2016 for our externally facing, export led region is regarding one of the most dramatic trends of the last three decades - the urbanisation of our world.  

An extraordinary demographic transformation before our very eyes which will continue long past 2016.

By 2025, just 600 cities around the world are forecast to account for two-thirds of global GDP…two-thirds of everything the world produces… and according to McKinsey, 200 of those cities will be in China.

These cities are the North East’s and the UK’s new competitors. It’s not about Sunderland and Middlesbrough competing with Swindon and Manchester, but about Sunderland competing with Stuttgart, Middlesbrough competing with Mumbai, Durham with Durban, or a city just being born in Indonesia or India. It’s about great British cities competing with the fastest growing areas across the globe.

We have the history and experience to compete on a global scale, so 2016 must be about continuing on the path to prosperity, embracing opportunities and aligning ourselves to make sure that the North East can and will compete on this global stage. 

To read more insights and views on the year ahead, take a look at the recently published BQ Yearbook.