Partner Article

What’s in store for the next six months in the region’s manufacturing sector?

Tony Sarginson of EFF explores what is next for the manufacturing sector in the Northeast.

As we enter the second half of the year now is a good chance to take stock of the recovery and assess what the rest of this year might hold for manufacturers in the North East. Whilst companies have enjoyed strong growth to date, more recently, the situation has become more uncertain as economic headwinds have picked up. Whilst some risks such as cuts in public spending and weak domestic growth are more predictable others, particularly those beyond our shores, will be more difficult to quantify. And it is those international challenges that could most significantly impede progress towards better balanced growth generated from North East exports and investment.

The most significant known unknowns are the outcome of the EU debt crisis where all eyes have recently been trained on the unfolding events in Greece. Despite the parliament pushing ahead with further austerity measures the prospect of default has not diminished. If any of the rescue measures fail, the Greek economy could run the risk of a disorderly default. Under this scenario, Greece would be unable to borrow, sending its economy into a tail spin where a crisis of confidence could follow, knocking global growth.

In addition, we face the prospect of a potentially stagnating US economy and increasingly frothy emerging markets. The global recovery could shoulder any one of these problems, but together the economic issues in the EU, US and China would be a perfect storm that could make life for North East companies far more difficult.

The extent to which these events pose a potential risk to the North East recovery will become clearer in the coming months. In the meantime, the Bank of England will continue to sit on its hands throughout this year. The question for North East MPs heading back to their constituencies for the summer is whether the challenge of generating sustainable private sector growth will have become that bit harder as a result of events beyond these shores. This makes it ever more important that efforts are clearly focused on sweeping away the barriers to creating jobs and more balanced and sustainable economic growth in which manufacturers in the North East play a key role.

This was posted in Bdaily's Members' News section by Ruth Mitchell .