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Somerset County Council Economic Bulletin December 2012
The Oxford Economic forecasts suggest that Somerset will not return to pre-recession levels of output, productivity or employment until 2015.
The Somerset economy is forecast to grow by 0.02 per cent in 2012 and by 2.05 per cent 2013. This is compared to the UK economy, which the model forecasts will grow, by 0.3 per cent in 2012 and 2.0 per cent in 2013.
The manufacturing sector will generate the most income contributing 15 percent of total output generated during the four years 2012 to 2015. This is followed by the wholesale and retail sector that will generate a further 12 per cent of total output. In terms of economic growth, the sectors expected to see the greatest percentage increases in output over the period are information and communication, and professional, scientific and technical activities, which are both expected to increase by 16 per cent.
By contrast, output in the mining and quarrying sector is expected to contract by 11 per cent; and the public administration and defence, and education sectors by 2 per cent each respectively.
Estimates suggest that 244,800 Somerset residents (75.4 percent of the population aged 16-64) were in employment during July 2011 to June 2012. While this is marginally higher than the same period 12 months previously, it is 8,100 fewer than during July 2007 to June 2008 (when the employment rate was 77.3 per cent).
It is not possible to determine conclusively whether the UK employment trends described above have been replicated in Somerset because the differences in estimates over time - even during a recession - are not large enough to be statistically significant.
The results do however provide a starting point for further exploration or discussion. For example, the point estimates, while not statistically significant, suggest that:
• the percentage of people in employment working full- time in Somerset increased between July 2007-June 2008 and July 2011-June 2012.
• there has been a small shift away from private sector (as opposed to public sector) employment over the period; and
• there has been a decrease in self-employment.
Somerset employment projections
Oxford Economics projections suggest that the number of jobs in Somerset is expected to increase by 10,800 between 2012 and 2015 (or 4.2 per cent).
This growth will almost exclusively be marketed service- sector led with all production sectors (except construction) and all 'public' sectors (except health and social work) reducing the number of jobs. The financial and insurance services sector, locally, will also lose a small number of jobs.
Comparable estimates for Somerset put unemployment at 13,700 or 5.3 percent (July 2011 to June 2012). This is comfortably below the UK rate of 8.1 percent for the same period and below the peak of 7.5 per cent recorded in Somerset two years previously. Chart 5 shows that while the local rate of unemployment reached levels comparable to the UK during the 2008/09 recession rates in Somerset have subsequently fallen while those in the UK have remained high.
Economic role of civil and defence aerospace sector in Somerset
A study on the civil and defence aerospace sector in Somerset undertaken by Strategic Economics Ltd on behalf of Somerset County Council was published in March 2012. The report presents estimates of the sector's contribution to the local economy and the likely impact of redundancies that have already been announced; describes the sector's global and UK operating context; and perhaps, most importantly, suggests how the Council and its economic development partners can support the industry within its 'dynamic and uncertain environment".
Drawing on official sources for employment and economic output, the report reveals that defence and aerospace sectors are "important to Somerset's economy, though largely concentrated in South Somerset and Taunton Deane" with the "main areas that require monitoring, and perhaps, nurturing, are linked to the Commando base near Taunton, the Navy Air Station at Yeovilton and the aerospace industry around Yeovil.
More specifically, the aerospace industry is estimated to:
• provide employment for 5,300 people in within core aerospace, with a further 800 employed in other sectors including some aerospace activity;
• generate £329 million worth of Gross Value Added (GVA) in 2008;
In addition the Ministry of Defence (MoD) is reported to employ 3,580 regular service personnel in the County (most of which are in the Naval Service) and 820 defence-related civil servants.
The report's authors suggest that "Somerset's defence and aerospace sectors face some difficult market conditions in traditional export markets" and notes that while, "in the downturn to date, generally, aerospace has been favoured by relatively healthy long- term order books for civilian aircraft and the immediate demands of military action ... the longer the downturn persists, however, the less favourable the sector outlook may become".
Measures suggested to support the industry include those designed to encourage:
• diversification of economic capacity or capabilities into new and existing high value activities
• provide employment for 5,300 people in within core aerospace, with a further 800 employed in other sectors including some aerospace activity;
• deepening of the skill and other capacity base to encourage investment stickiness by existing firms and fresh inward investment by new or existing firms
The manufacturing sector will generate the most income contributing 15 percent of total output generated during the four years 2012 to 2015. This is followed by the wholesale and retail sector that will generate a further 12 per cent of total output. In terms of economic growth, the sectors expected to see the greatest percentage increases in output over the period are information and communication, and professional, scientific and technical activities, which are both expected to increase by 16 per cent.
By contrast, output in the mining and quarrying sector is expected to contract by 11 per cent; and the public administration and defence, and education sectors by 2 per cent each respectively.
Estimates suggest that 244,800 Somerset residents (75.4 percent of the population aged 16-64) were in employment during July 2011 to June 2012. While this is marginally higher than the same period 12 months previously, it is 8,100 fewer than during July 2007 to June 2008 (when the employment rate was 77.3 per cent).
It is not possible to determine conclusively whether the UK employment trends described above have been replicated in Somerset because the differences in estimates over time - even during a recession - are not large enough to be statistically significant.
The results do however provide a starting point for further exploration or discussion. For example, the point estimates, while not statistically significant, suggest that:
• the percentage of people in employment working full- time in Somerset increased between July 2007-June 2008 and July 2011-June 2012.
• there has been a small shift away from private sector (as opposed to public sector) employment over the period; and
• there has been a decrease in self-employment.
Somerset employment projections
Oxford Economics projections suggest that the number of jobs in Somerset is expected to increase by 10,800 between 2012 and 2015 (or 4.2 per cent).
This growth will almost exclusively be marketed service- sector led with all production sectors (except construction) and all 'public' sectors (except health and social work) reducing the number of jobs. The financial and insurance services sector, locally, will also lose a small number of jobs.
Comparable estimates for Somerset put unemployment at 13,700 or 5.3 percent (July 2011 to June 2012). This is comfortably below the UK rate of 8.1 percent for the same period and below the peak of 7.5 per cent recorded in Somerset two years previously. Chart 5 shows that while the local rate of unemployment reached levels comparable to the UK during the 2008/09 recession rates in Somerset have subsequently fallen while those in the UK have remained high.
Economic role of civil and defence aerospace sector in Somerset
A study on the civil and defence aerospace sector in Somerset undertaken by Strategic Economics Ltd on behalf of Somerset County Council was published in March 2012. The report presents estimates of the sector's contribution to the local economy and the likely impact of redundancies that have already been announced; describes the sector's global and UK operating context; and perhaps, most importantly, suggests how the Council and its economic development partners can support the industry within its 'dynamic and uncertain environment".
Drawing on official sources for employment and economic output, the report reveals that defence and aerospace sectors are "important to Somerset's economy, though largely concentrated in South Somerset and Taunton Deane" with the "main areas that require monitoring, and perhaps, nurturing, are linked to the Commando base near Taunton, the Navy Air Station at Yeovilton and the aerospace industry around Yeovil.
More specifically, the aerospace industry is estimated to:
• provide employment for 5,300 people in within core aerospace, with a further 800 employed in other sectors including some aerospace activity;
• generate £329 million worth of Gross Value Added (GVA) in 2008;
In addition the Ministry of Defence (MoD) is reported to employ 3,580 regular service personnel in the County (most of which are in the Naval Service) and 820 defence-related civil servants.
The report's authors suggest that "Somerset's defence and aerospace sectors face some difficult market conditions in traditional export markets" and notes that while, "in the downturn to date, generally, aerospace has been favoured by relatively healthy long- term order books for civilian aircraft and the immediate demands of military action ... the longer the downturn persists, however, the less favourable the sector outlook may become".
Measures suggested to support the industry include those designed to encourage:
• diversification of economic capacity or capabilities into new and existing high value activities
• provide employment for 5,300 people in within core aerospace, with a further 800 employed in other sectors including some aerospace activity;
• deepening of the skill and other capacity base to encourage investment stickiness by existing firms and fresh inward investment by new or existing firms
