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New reports on North East economy reveal impact of COVID-19 and EU Exit

The North East Local Enterprise Partnership has published two new reports, one, an annual state of the region report and the other exploring the impact of COVID-19 and EU Exit on the North East economy.

The LEP’s annual Our Economy report has been published in two parts in 2021. The first report tracks the long term performance of the North East LEP economy across a range of key economic indicators and provides an overview of how it is changing over time.

It also includes an update on progress towards the North East LEP’s aim of bringing 100,000 more and better jobs to the region by 2024, and analysis of the impact of emerging policy priorities, like levelling up and decarbonisation, on the North East.

The second report provides a comprehensive and in-depth look at the national and regional data, research, insights and commentary that shows how COVID-19 and EU exit has impacted the regional economy. Drawing on a range of additional and innovative sources of data, ‘Our Economy: Insights into the impact of COVID-19 and EU transition on the North East Economy’ gathers intelligence on the impacts of the pandemic and EU exit on the North East economy from March 2020 to the current day.

Lucy Winskell OBE, Chair of the North East LEP, said: “This year, perhaps more than any other, developing our shared understanding of change in the regional economy is crucial.

“The work we have done to track, analyse and interpret data and evidence about the performance of our regional economy is central to our role at the North East LEP and a core part of the support we offer our partners.

“It is integral to our economic leadership, our influencing work with government, and underpins our investment decisions and stewardship of public funds, ensuring that regional programmes of delivery are targeted at addressing the key opportunities and challenges we face.”

The reports state that whilst the short-term impact of COVID-19 on the North East was highly disruptive and challenging, the region has continued to sustain increased levels of employment compared with its baseline in 2014, with continued growth of the proportion of better jobs – managers, directors and senior officials; professional occupations; and associate professional and technical occupations – in the region.

They also show the impact of COVID-19 on business and the labour market has been significant. Some sectors, including retail, culture and hospitality, have seen severe changes. Local, regional and national intervention has had an impact in protecting businesses and jobs, but the impact now many of these support measures have ended is unclear.

Inequalities within the region have been exacerbated by the pandemic too, with employers in many industries struggling with skills shortages.

The reports also include data showing that the region’s engagement with the global economy is changing, with the impact of EU Exit creating barriers to trade and the future trading environment still evolving.

Our Economy 2021 also looks at the performance of our programmes and sectors – which have been identified as areas of opportunity for the region, including health and life sciences, digital and energy.

Richard Baker, Strategy and Policy Director at the North East LEP explained: “The economic shock has accelerated a number of opportunities for the North East, with growth and new jobs in some of the key areas of strength and opportunity we have been focused on – in energy, life sciences and digital industries for example.

“Many firms across the economy have changed their operational models, with rapid deployment of digital technology, changing approaches to delivery of goods and services locally and growth in online exporting. There are genuine opportunities for the region to drive forward greener businesses and to drive productivity.”

The evidence provided by Our Economy is used to inform the work of the North East LEP and partners across the region in delivering the North East Strategic Economic Plan – the roadmap for increasing economic growth in the North East.

Our Economy 2021 is available to view on evidencehub.northeastlep.co.uk.

Our Economy: Insights into the impact of COVID-19 and EU transition on the North East Economy is also available to view on evidencehub.northeastlep.co.uk.

The North East Strategic Economic Plan can be read at northeastlep.co.uk.

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New business survey launched to assess impact of EU exit and coronavirus pandemic in the North East

The beginning of 2021 has been a challenging start to the year for many businesses. England entered another national lockdown at the end of December, and the UK’s exit from the EU on 31 December brought new rules and regulations impacting all businesses that operate in the European Union.

Because of this we have launched a brand new survey on the North East Growth Hub to find out how our region’s businesses have been impacted by the UK’s new trading agreement with the EU, and the ongoing coronavirus pandemic. We want to find out what preparations, planning and changes organisations have been able to make during this very difficult time.

All the information shared with us will be fed back to government, ensuring North East businesses get the help and support they need.

One of the main things we want to understand is how the UK’s exit from the EU – and its new trading agreement with the bloc – has affected businesses in the North East. We know from previous surveys that many regional businesses had not prepared for the new rules, which came into force on 01 January this year. We’d like to know what the impact has been in areas such as customs procedures, paperwork relating to imports and exports, supply chain disruption, and data storage and transfer. We are also keen to know if this has opened up any new opportunities for businesses.

The coronavirus pandemic continues to be the main concern for most businesses in the North East. A large proportion of our region’s businesses have been forced to close because of the new national lockdown, and business owners have to – once again – look to new, innovative ways to engage with their customers.

Through this new survey we’d like to understand what measures businesses have taken to shield some of the impact of COVID-19; whether that’s been through stockpiling, furloughing staff, adopting new technologies, or introducing new products and services.

We’d also like to know if businesses plan to retain any of the changes they’ve made after we emerge from the pandemic, for example, remote working, or a greater focus on online retail.

Businesses can also let us know if they have benefitted from any of the government’s financial interventions, including the Coronavirus Job Retention Scheme, Bounce Back Loans, and grant payments. Importantly, we’d like to know from businesses if they think some of these measures should continue.

The final part of the survey focuses on business resilience. We know many North East businesses have made huge changes to adapt to our current situation, and we’d like to know the type of measures businesses have introduced. It could be a greater investment in IT and digital, more focus on crisis planning, investing in staff training, or introducing e-commerce. Whatever changes businesses have made, we’d like to know what they are and how effective they’ve been.

All the information we gather through this new survey will help us deliver the right support, to the right businesses, at the right time. The survey takes approximately 10 minutes to complete and all the information supplied will be treated confidentially.

You can access the Understanding how EU Transition and COVID-19 is impacting your business survey via this link.

Thank you in advance for sharing your feedback. If you have any questions about the survey you can contact us by emailing [email protected].

And do please remember that North East businesses looking for free, impartial, one-to-one business support and advice can book an appointment with our Growth Hub Connectors via www.northeastgrowthhub.co.uk. The Growth Hub Connect team can guide you through the business support, and finance and funding available to help your business thrive in 2021.

By Emma Ward, Research and Evaluation Manager at the North East Local Enterprise Partnership.

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Statement from Lucy Winskell OBE, Chair of the North East LEP, on today’s EU trade agreement

This afternoon the Government announced a trade agreement between the UK and the EU.

Lucy Winskell OBE, Chair of the North East Local Enterprise Partnership, commented: “We welcome the news of the deal between the UK and the EU and hope that it will provide clarity for businesses, and a continuation of trade between the North East and partners in the EU, and beyond.

“As details of our new trading relationship become clear we will continue to work with businesses and partners across the region, helping businesses to take advantage of opportunities and building a bright future for the North East.”

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North East partners agree key messages for the Brexit negotiations

As Brexit discussions continue, we have been working with key regional partners to revisit and restate the region’s priorities.

The North East Brexit Group brings together key networks representing businesses, education, trade unions, local authorities and voluntary organisations.

Its purpose is to ensure that opportunities and concerns are identified and communicated consistently and that advice and support is given to North East businesses and residents as the detail of changes emerges.

The consensus remains that:

  • The North East is, and should, remain an open economy able to continue to strengthen trade, attract investment and secure skills
  • The outcome of the negotiations must deliver a strong ongoing relationship with the European Union
  • The UK needs to develop new policies in a number of areas which will replace and improve on resources and regulations which are currently derived from the European Union.

Although many of the issues set out in the statement of key messages are relevant to other places in the UK, the North East Brexit Group believes the impact on the region could potentially be greater as a result of:

  • The sectoral composition of the North East, with particular reference to Digital; Advanced manufacturing; Health and life sciences; Subsea, offshore and energy technologies; as well as education, key services and transport.
  • The North East being a leading exporting region within England, with exports to Europe making an unusually large proportion of its economic activity. Over 140,000 North East jobs are dependent on EU trade alone.
  • The importance of inward investment to our economy – the North East is one of the leading locations for inward investment outside London, with a larger than average proportion of North East jobs being in internationally owned businesses.
  • The structure of our labour force – ensuring that the region’s future growth objectives needs workforce needs to be met, in particular the North East needs to retain access to skilled migrants and international students.
  • Our geographical location as a result of potential competitive disadvantages if Scotland develops more favourable tax, regulatory, trade or immigration policies.

As a collective we will continue to circulate these key messages within the region and more widely to national and regional bodies. We will also be carrying out detailed work looking at different dimensions of the Brexit debate.
Anyone seeking more information on our work to date can find more detail here.

Richard Baker, Head of Strategy and Policy, North East Local Enterprise Partnership (LEP).

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Preparing for Brexit

Colin Bell, North East LEP Business Growth Director, on preparing for Brexit:

Last week we joined forces with the CBI and law firm Ward Hadaway to hold a breakfast seminar, advising businesses in the North East on how we can all begin to prepare for the impact of Brexit.


We were joined by representatives from sectors including manufacturing, engineering, healthcare and finance gathered for the event, which took place almost exactly a year since the referendum which saw the UK vote to leave the EU.


Even though we’re still in the dark about the consequences of Brexit on the way we do business, it’s vital that we begin to get ready for the changes which are sure to come.


Sarah Glendinning, Regional Director of the CBI, began the morning by outlining the CBI’s six key principles which it says should guide UK negotiations with the EU: barrier-free trading; certainty on regulation; a migration policy that gives companies access to skills and labour; an approach that protects social and economic benefits of EU funding; and a smooth exit from the EU, avoiding a “cliff-edge” that causes disruption.


Sarah’s advice was that we have to ‘get on with business’ despite the uncertainty and indications of support from the business community for staying within the EU.


During the event I asked the question ‘How can we develop a culture within businesses that can adapt and flex in relation to the risks and opportunities Brexit will bring?’


Even though we’re now in a time of change and uncertainty there are still ways in which businesses can be preparing for Brexit’s impact and it’s not too early for us to be putting strategies in place.


During the session I outlined a number of ways in which business leaders can begin to prepare including making links with organisations such as the Department for International Trade and looking into opportunities within growing overseas markets such as Asia and China. Above all, business leaders must offer strong leadership to their teams and know that it is never too early to start to make plans for change.


We also heard from Colin Hewitt, Partner and Head of Commercial at Ward Hadaway, who spoke about the legal implications of Brexit, saying: “It may be early days for the Brexit negotiations but with less than two years before those negotiations are due to conclude, the situation has the potential to change very quickly so businesses have to start taking steps now to ensure they are not caught out.”

Colin H also discussed the impact on areas including employment, procurement, competition and commercial contracts and outlined some practical steps which businesses can take now.

It was encouraging to see so many people from the North East business sector turn out to learn more about how we can make the best of this time of change. It’s important that we work together as a region, not only taking steps to mitigate risk and uncertainty but also identifying and maximising new opportunities which may also be a result of the new business landscape.

We will be holding more partnership events like this across the region, helping business to prepare for Brexit. Sign up to the North East LEP mailing list to be kept informed about future dates.


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North East LEP seeking Government assurances on Euro funding

Brexit and its impact on European Union structural funding will be more keenly felt in the North East than any other region.

We have an outstanding track record of securing substantial investment from Europe and investing it wisely to drive our economic growth.

While I can’t give cast iron guarantees about future EU funding, I think it’s important to outline where we are currently at and what the North East LEP is doing to press Government for assurances so we can plan ahead for a future without EU investment.

The North East LEP area has £90m of its total £437m EU funding allocation committed to projects planned to run until 2020.

We also have £104m worth of projects in the pipeline, put forward to Government for approval before the referendum vote.

There are big numbers attached to these schemes. In total, they will assist more than 7,400 businesses, support almost 30,000 people into work and help upskill people in work.

So far the Government has stated that it is ‘business as usual’ for contracted projects.
However, for the £104m of pipeline projects, the assurance of being able to secure EU funding is uncertain.

There are two important issues that we are seeking urgent Government assurance on.

Firstly, quantum. We have had verbal commitment – albeit from ministers no longer there – and quite strong public comments that the Government is committed to replacing the quantum of support that the North East currently has from the EU.

There have been more mixed signals since the referendum, however, about whether they will honour the full amount.

We have not had unequivocal certainty from Government. That is fuelling economic uncertainty and we need a commitment quickly that they will underwrite the full amount.

If the Government does commit to match the EU funding being lost, then that brings us to a second issue.

Can the Government commit to an absolute timing mechanism that triggers as soon as the EU funds stop?

That would allow our partners match funding the big structural projects to be able to develop their business cases and plan ahead with greater certainty for the longer term.

The future of the £120m Jeremie 2 fund is another hugely important issue for the North East.

European money makes up half of the fund which we worked hard to keep in the region for the exclusive support of North East small and medium-sized businesses.

We are seeking assurance that there will not be a negative impact on Jeremie 2 due to Brexit. In parallel, we are also exploring alternative ways to deliver similar support if that scenario arises.

A substantial amount of regional funding comes from the UK, through the Regional and Local Growth Funds and Enterprise Zones.

We handed our final submission for Local Growth Fund 3 to Government this week. We have put forward a very ambitious list of projects for the North East.

A really positive signal from Government would be a positive response to our Local Growth Fund bid – that would demonstrate real confidence in our economic future.

By Andrew Hodgson, North East LEP Chair