Christmas cheer not fear will beat credit crisis gloom

TILLS will need to ring like never before on Yorkshire’s high streets this Christmas but it’s confidence not just consumer spending that will help the region buck the economic downturn.

Speaking to TheBusinessDesk.com Patrick Bowes, economist for regional development agency Yorkshire Forward, said that there was cause for optimism despite the credit crisis and that the region was well placed to ride the economic storm.

He said that although few sectors remained untouched by the current crisis inward investment continued to be strong and companies operating in emerging sectors such as renewable energy were experiencing growing demand.

Mr Bowes pointed to positive trends in other sectors including manufacturing adding that lessons learned from the previous recession were paying dividend.

“Employers have already taken steps such as reducing shifts, but they are doing the best they can to retain skilled workers,” he said.

“Many remember the recession of the early 90s when workforces were reduced very quickly and dramatically, which led to a lot of recruitment issues when the economy picked up.

“And although the number of domestic orders is down, optimism for the export market remains surprisingly strong as reflected in a number of recent surveys. We’ve also seen an increasing number of manufacturers move their operations back to the UK from China.”

However, he admitted that the hotel and leisure sector was hurting and that both industries were in trouble.

“Figures show that the has been contraction over three consecutive quarters. It’s a very difficult trading environment,” he continued.

Mr Bowes cast a similar picture too for retailers adding that the region was home to a number of high profile firms.

“They will be wanting a good Christmas and Yorkshire’s high streets will need to be busy,” he said.

“The UK is a consumer driven economy and it’s important that people keep spending.”

Despite its current turmoil however, Mr Bowes predicts that the financial services sector will not significantly contract, although he acknowledges that cuts will be made.

He said that there were a lot of different skills within the sector such as wealth management and retail banking that were strong in the region offering synergies that represented new opportunities across Yorkshire.

Moreover, the region’s current mix of industries and skills will help reduce any negative economic impact.

“The slow down in the economy during 2001/02 was a bit like a dry run for Yorkshire and showed that the Northern regions can do well in a downturn,” said Mr Bowes.

“That diversity is going to be important over the next few years.”

The economist said that it was difficult to predict whether recovery would be in 2010 or a year later, but that confidence was the key to coming out of the recession.

“The recession is unlike any previous recession before it,” he said.

“I think lessons will be learned and policy makers will have to work more collaboratively on a global level.”

However, he warned that the worst was yet to come and that new data in the coming weeks would offer a more detailed insight into the health of individual sectors.

“The problem with a lot of surveys at the moment is that they aren’t very large,” observed Mr Bowes.

“The Yorkshire Forward survey is the largest of its type and will help us truly understand the credit crisis’ economic impact on the region.”