Press releases

North East outperforms the UK average for productivity growth across multiple sectors

28 November 2018

  • North East outperforms national average productivity growth in eight of 13 sectors
  • Best performing against the national average were accommodation and food service (+37%), construction (+34%) and public administration (+33%)
  • Unemployment rates have fallen from 12% in 2011 to 5% in 2018
  • Productivity gap between the North East and rest of the UK still exists but shows signs that it may be closing 
  • Findings come from Deloitte’s latest Power Up report: UK-Wide Growth Unlocking productivity across UK regions and nations, which examines 20 years’ of productivity and employment data from the Office of National Statistics (ONS)

A report by Deloitte has found that the North East is potentially closing the productivity gap with the rest of the UK, as it has outperformed national average productivity growth across a broad range of business sectors.

While the region ranks mid-table for productivity on the whole in the latest ONS figures*, there are significant reasons for optimism as arts, entertainment and recreation; information and communication; administrative and support service activities; professional, scientific and technical activities; public administration; construction and accommodation and food service, have all outperformed the national growth average since 1997.

Consulting more than 50 business leaders, educators, local government officials and other influencers from across the UK, including the North East, Deloitte’s Power Up UK-Wide Growth report sets out to combine the ONS data with the insight from regional voices to identify how best to unlock future growth.

Business leaders in the region identified access to skills and improved transport infrastructure as key factors in driving growth, echoing national findings. However, investing in technological change was also a key theme in the North East.

Gillian Marshall, chief executive of the Entrepreneurs’ Forum, said: “The biggest challenge is access to talent, especially in the digital and tech space. There isn’t a lack of talent but there is a lot of competition in that space. What are educators doing to address the future need for those skills?

“Big businesses are more attractive to new talent for job security, therefore smaller entrepreneurial businesses and SMEs struggle to attract the right talent. Although the skills gap is challenging, it isn’t holding entrepreneurial businesses back, they will always find a way to grow and push forward.”

Stephen Hall, office senior partner for Deloitte in Newcastle, said: “The report helps to build a picture of the employment and productivity landscape across the region and it’s one that provides significant hope. The North East has had a harder fight than most regions to recover from the recession, but it is seeing strong productivity growth overall in areas including, information and communication, public administration and construction.

“One of the biggest issues we need to focus on is that the most productive sectors have become less represented in employment numbers, so there is a need to create the right jobs in the right sectors to help close the productivity gap.”

Other key North East findings from the report include:

  • Sectors that have demonstrated the largest productivity growth were: public administration (144%), accommodation & food service (130%), construction (126%), information and communications (126%), financial and insurance (99%);
  • Sectors which have seen the largest growth in employment were: information and communications (100%), education (51%) and administrative support (47%); and
  • The top sectors which have seen both productivity and employment growth were: real estate activities, information and communications, education, administrative support and health.

Pauline Biddle, managing partner for UK regions Deloitte, said: “We’ve taken the overall topic of productivity to help identify where we can maximise on opportunities by learning from the past, and then combined this with the very real experiences and views of the present.

“Analysing data by industry, we looked at the best regional performer for each sector. If this performance was replicated across the UK as a whole, this would be worth an additional £263bn to the economy, or nearly £10,000 for every UK household.

“There is an overwhelming sense of regional pride and commitment that comes through from the interviewees,” explained Biddle. “Regional businesses need a devolution framework and for deals to work effectively. Regions need to plan and execute place-based strategies and work with recently appointed metro mayors in our city regions, but making sure that other areas do not lose out unfairly in spending and investment allocations.”

End

Note to editors

About the Power Up report
The report consulted and interviewed more than 50 business leaders, educators, local government officials and other influential figures in Scotland, Wales, Northern Ireland and the eight English regions outside London. The report describes each UK region and nation’s economic performance. It investigates strengths and weaknesses and outlines a series of proposed actions, deriving from discussions with senior business leaders that can help to raise the contribution of many regions to a new level.

The regions and nations are:

  • East of England;
  • East Midlands;
  • North East;
  • North West;
  • Northern Ireland;
  • Scotland;
  • South East;
  • South West;
  • West Midlands;
  • Yorkshire and Humber; and
  • Wales.

About the Power Up data
The 15 sectors analysed:

  • Agriculture, mining, and utilities;
  • Manufacturing;
  • Construction;
  • Wholesale and retail trade;
  • Transport and storage;
  • Accommodation and food service;
  • Information and communication;
  • Financial and insurance activities;
  • Professional, scientific and technical activities;
  • Administrative and support services;
  • Public administration;
  • Education;
  • Human health and social work; 
  • Arts, entertainment and recreation; and 
  • Other service activities.

All data is sourced from the Office for National Statistics (ONS), some publicly available, others under license agreement.

*Latest ONS figures as of June 18

The employment numbers are from 1982 to 2017. The productivity (as measured by output per hour worked) numbers are from 1997 to 2015 across 15 industries and all regions. The change in productivity is analysed across three different time frames – pre-crisis (1997-2007), post-crisis (2007-2015) and overall (1997-2015). The annual UK productivity is the average of the productivity numbers for the four quarters. The UK productivity for each industry is the based on the average of all the regional numbers for each industry.

Interviews were conducted with:

  • Gillian Marshall, CEO, Entrepreneurs’ Forum
  • Adam Serfontein, MD, Hanro Ltd
  • Ben Houchen, Conservative Mayor of the Tees Valley
  • James Ramsbotham, North East England Chamber of Commerce
  • Robert Forrester, chief executive of Vertu Motors  

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

For more information, please visit www.deloitte.co.uk.

Member of Deloitte Touche Tohmatsu Limited

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