Cautious optimism for export prospects

A former senior official of the Bank of England has told leading North East businesses that the region must be realistic about export and manufacturing’s ability to stimulate economic growth.

David Buffham, former Bank of England Agent for the North East of England, who was speaking at an event arranged by chartered accountants and business advisers Clive Owen & Co LLP and commercial law firm Dickinson Dees, said that recent success in increasing UK exports offered an opportunity to the North East, with its strength in manufacturing. However, that success depended upon continuing to improve competitiveness and the strength of key export markets such as Germany and Asia.

He also said that “While the much sought after rebalancing of the economy in favour of manufacturing and exports is occurring, UK manufacturing only accounts for some 12-13 percent of the economy, so the idea that it is going to replace financial services or the wider services sector is just fanciful. It would have to grow at about five or even ten times the rate of the service sector over many years to achieve any significant rebalancing.

“We also need to be mindful that manufacturing is a very efficient user of labour, so although it accounts for 12-13 percent of the economy, this translates to less than ten per cent of employment.”

He added: “While the North East has a particular strength in export, I would caveat that by saying that we need to understand the extent to which this growth has been partly down to the weakness of sterling, which has improved competitiveness.”

Despite his note of caution, Mr Buffham does believe that the North East manufacturing sector can build further upon the growth it has already seen over recent years.

“I think the growth we have seen can continue,” he said, “and the North East is perhaps better placed than other areas of the country to take advantage of the opportunities presented by major export markets. Around fifty per cent of our exports are to Europe, and with recent strength in the German economy for instance, we can capitalise on this. What we need to do is to continue to make products that people want and need.”

Mr Buffham spoke to more than 60 business people from across the region at the event, which was held at Darlington Football Club today [Wednesday, May 18].

Clive Owen, senior partner at regional based Clive Owen & Co LLP, said: “Mr Buffham gave a fascinating insight into the economic landscape the North East faces, and the response we had to the event from clients and contacts alike shows that there is a real desire to understand how the region is performing.”

Nigel Williams, partner at Dickinson Dees’ Teesside office, said: “For many businesses, we hear so much about the economy that we don’t really absorb or understand how the North East is fairing.

“It was great to hear from David, who, having worked for the Bank of England for such a long time, has a real insider’s knowledge of the UK economy.”