State of the Region: Experts debate growth prospects

HOW to build on a return of business optimism and encourage growth in the region was keenly debated by a panel of North West leaders at the TheBusinessDesk.com’s 2013 State of the Region report launch.

The event, held at DLA Piper’s offices in Manchester, saw a panel of experts debate the key business, financial and economic issues set out in the benchmark report in front of an invited audience of 70 senior business leaders.

The panelists were: Robert Hough, chairman of Liverpool Local Enterprise Partnership; Steve Mogford, chief executive of Warrington-based FTSE 100 United Utilities; Juergen Maier, chairman of the North West Business Leadership Team and managing director of Siemens Industry UK and Ireland; and John Ashcroft, economist and chief executive of pro.manchester.

Click here to see a gallery of images from yesterday’s event.

The State of the Region report is sponsored by DLA Piper, Yorkshire Bank and the CBI. Click here to download it.

All agreed that the positivity voiced by businesses in the report reflected a sense that the international picture is improving, rather than a noticeable pick-up in domestic demand.

John Ashcroft said: “In January last year, as a group of economists we had no idea where we would be and what would happen. As we start this year we are more positive and more people think they know what will happen.

“We don’t have to worry about the US fiscal cliff, the Chinese choke and the European yo-yo – some of those factors have gone. There is a lot of stability on the international scene.

“In the UK growth is modest, inflation will struggle to get to 2% and no-one is expecting interest rates to rise.”

Juergen Maier agreed but added: “But there are still problems that fundamentally haven’t been sorted, such as access to finance and we could also be doing more in infrastructure investment – for example, one of the things that are holding growth for Siemens is the dithering around on energy policy.”

According to the State of the Region report, just 21% of North West businesses think that international markets provide the best opportunities for their business – 79% see greater opportunities from within the UK.

Despite the government’s drive to get more UK businesses exporting, Mr Ashcroft said it is a mistake to pin recovery on international trade.

He said: “Every time you export [a product] you are importing 60% of that [component] content – we will never get a net gain for growth. It is not the salvation and we have got to look at national demand.

“The consumer is not debt constrained but income constrained – we should look at the serious problem of getting life back into the consumer. Until that happens we won’t see an economic recovery at any pace.”

He added that export strategies for business growth were “very expensive” and “hugely risky” suggesting the opportunistic, ad hoc approach of gaining one order in one country and developing a platform from there, remains the best.

Robert Hough, chairman of Liverpool LEP, added: “There is substantial risk to investing in new markets. UKTI has a target for 1,000 new businesses from this region to be exporting in 2013 and this is on target to be achieved.

“The report figures on exports are a little surprising as they show that compared to the West Midlands and Yorkshire there is less appetite to export here. But if you look at the eurozone where half of UK exports go, it will be flat so people have to look to new markets.”

Mr Maier said the UK had historically not had a strategy for an export economy and that certain key areas where the UK will be world exporters in terms of expertise.

“This comes down to picking winners – every other country that has been successful at export has done that. We do have to decide what areas we will pick,” he said.

Commenting on the growth debate DLA Piper partner Yunus Maka said: “A year on and the results indicate that regional businesses still remain sceptical about the UK economy, with growth expected to stay flat.

“However, a major change is that cautious optimism seems to be creeping back across the North West with over 74% of businesses expecting some sort of growth. This increased optimism has led businesses to have improved prospects, although modest ones for 2013.”