Global economy still creating difficult environment for West of England businesses
Continued global economic challenges are presenting a difficult environment for the West of England. Global and national economic pressures continue to be reflected in the West of England, with national trends being mirrored locally; however it could be argued that the severity is not as prominent as it is for many other parts of the country.
The LEP submission bid set out the aim to create about 95,000 new jobs by 2030; this equates to approximately 4,750 jobs annually. Between July 2011 and June 2012 there was approximately 538,400 people of working age in employment with the West of England; this is a decrease of 8,000 for the same period in 2010‐2011.
This data is from a sample survey and the information therefore does not equate directly to job creation or job losses. However, the information represents a decline and any fall in the number of people of working age in employment and the factors that may be driving this, is potentially an area of significant concern for the LEP, and has implications for meeting the jobs target of 95,000 jobs.
The West of England office through its Economic Intelligence Panel is looking further into the survey and the potential causes for this decline. It could be that the apparent decline reflects anomalies in the data as it is drawn from a survey and consequently has relatively large confidence levels. However, if further analysis does highlight issues specific to the West of England, recommendations will be made to the LEP Board regarding appropriate courses for intervention.
As of September 2012 there were 12,207 jobs advertised by Jobcentre Plus within the West of England. 60% of these advertised vacancies are in real estate, renting and business activities (this includes agency jobs so is disproportionately large), 14% in other community, social and personal service activities and 5% in wholesale and retail trade. These vacancies are only a proportion of those that are available in the West of England, as not all companies advertise through JobJobcentre PlusuJobcentre PlusuJobcentre Plusesn't give us an indication of the type of jobs available e.g. part / full‐time or temporary, skilled or unskilled etc. Furthermore, it is unclear as to whether or not these are net new jobs being created within the West of England or a result of natural churn within existing stock.
The increase in the number of vacancies advertised by Jobcentre Plus has coincided with a decrease in the number of claimants per vacancy. There has been a gradual decline in the number of claimants since March 2012. However, the level of claimants remains high. Of particular concern is the number of long‐term claimants, particularly amongst those aged 16‐24. The decrease in claimants per vacancy links to the results of the barriers to growth survey which states that 28% of respondents had increased the size of their workforce over the last 3 months. However, over the next 3 months 73% of respondents are expecting their workforce to remain constant. This can have a continued effect on the number of long‐term claimants. If the trend of long‐term claimants amongst the young persists we can expect to see further polarisation amongst communities with those long‐term unemployed finding it increasingly difficult to re‐enter employment.
The number of Inward Investment enquiries received during the 3rd quarter of 2012 has increased on the 3rd quarter of 2011 suggesting that business confidence is improving. The barriers to growth survey support this indicating that confidence in UK sales and orders, export sales and orders, business confidence and cash flow have all improved on the last quarter.
The number of business start‐ups in the West of England was lower in the 3rd quarter of 2012 than it was for the same quarter in 2011. This potentially reflects the double‐dip recession, which was reported for the 1st quarter of 2012. Despite an indication through the Barriers to Growth survey that cash flow is improving, 15% of respondents still cite access to finance as their biggest barrier to growth. Although access to finance is improving for existing companies this may not be the case for individuals wishing to start up companies, which could affect the number of new business start ups coming forward.
The macro outlook for West of England businesses remains subdued. This makes co‐ operation and competition at a micro level even more important than usual. An injection of confidence is required but this is unlikely to come from the top. Targeted funding to the drivers of productivity might help to address failures, capture opportunities and build access and confidence. In the end, it is a recovery in household and business spending power that is needed for growth. Until this is more sustained, there is no substitute for hard work and entrepreneurship across the spectrum of industries and areas to maximise the West of England's share of current expenditure.
This Executive Summary is drawn from the Economic Bulletin, produced by the West of England Office, and the Barriers to Growth Survey Report, produced on behalf of the West of England LEP, by Business West. Both documents report on the third quarter of 2012.
