The nation has voted, but whether wisely in preferring to quit the European Union no-one can tell yet. We do know that up until referendum day – and despite the steel industry crisis – the North East’s economy had been making progress. More of the region’s firms had been selling abroad, and the highest level of direct foreign investment for a decade was coming in.
The 2.4% increase in businesses exporting was highest among all regions in the first quarter of the year, HM Revenue and Customs found. And the highest entry of foreign finance in a decade during 2015 had led to 3,287 new jobs. An EY tally showed 44 foreign direct investments, against 24 in 2014. Mark Hatton, EY’s North East senior partner, believes work done to position the North East as a strong investment location in global eyes was starting to pay off.
Newcastle, Sunderland and Newton Aycliffe have been main beneficiaries. Hitachi, Marlow Foods, Nissan and Akzo Nobel were the prime foreign investments, creating more than half of the reported new jobs. Software and chemicals also did well out of it. American and Japanese investment has been significant, but so too has been the investment from France and Germany and we don’t know yet to what extent in the future those countries will buy in. China also, ranking third in the UK as a whole, doesn’t make the top 10 in the North East.
Other sound performers of the region include Middlesbrough, South Tyneside and County Durham, the latter named one of five outstanding areas of the country for business start-ups to excel in, rated third by the Department of Work and Pensions.
And managers of the North East Angel Fund have noted how companies in Middlesbrough are more successful at applying for angel investment than those elsewhere in the North East. More self-employment is evident there too. The Regeneration Fund run by UK Steel Enterprise in support of start-ups and small businesses saw nearly five times the number of loans approved in the first five months of 2016 than during the same period a year before.
Data from the North East Microloan Fund, too, show firms from South Tyneside area are most successful in the region with their micro applications. David Beaty, HSBC’s regional director for corporate banking in the North, looked at the year to last March and pointed out: “The actual value of North East exports has fallen.”
While the value of UK exports as a whole fell 2.3%, the fall in the North East was 8.9%. And while jobs have increased, the pace of job creation slowed to marginal from May.”
Official figures in June showed employment up by 19,000 over 12 months, putting unemployment at its lowest since August 2008. The falling pound now, eating into disposable income and savings, will reflect in the shops. Threatening to dampen investment in commercial property. And while a cheaper pound in theory could benefit North East export sales, that won’t necessarily be the case for firms needing to import their raw materials. Crucially for the North East over all, the question is: will the Government invest here at least as much as the European Regional Development Fund has done, giving back £10 for every £1 taken.
Will the Government, too, apportion more fairly to the North East its per capita share of public investment in infrastructure? An ongoing situation, whereby the region gets only 50p out of every £100 in the country’s infrastructure budget - half of 1% while London gets 44 times more. And if a spending choice has to be made between a Heathrow Airport expansion or an HS2 railway, most business folk in the North East will probably agree the former is more vital and say: “Get on with it.” They’ll also probably agree devolution in the North East must be at a level enabling it to stand up commercially to Scotland.
Brexit champions suggest, but cannot yet prove, British business will thrive more outside the EU, any more than those who voted remain can prove otherwise. Two difficult years loom. But six months from now, and again a year from now, check the trends against some of the facts above.