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December 2011
The Manchester Monitor is a dashboard of Greater Manchester specific data and indicators designed to provide a monthly analytical snapshot of the economic wellbeing of the city region.
DECEMBER 2011
In the bleak midwinter?
Those hoping for New Year cheer will be disappointed by the new Office for Budget Responsibility (OBR) forecasts released with the Chancellor’s Autumn Statement. He announced that the Government will have to borrow £111 billion more than expected by 2016 due to the lack of economic growth. This means the cuts to public spending will continue until 2017 and by £15 billion more than originally envisaged.
The OBR forecasts point towards tough times ahead, with UK economic growth expected to be 0.9% this year, down from the previous estimate of 1.7% . It is likely to be even weaker next year at 0.7% , and unemployment is forecast to reach a peak of 2.8 million by the end of 2012. According to the OBR’s central prediction, the UK will avoid recession – though this assumes that the Eurozone crisis can be resolved. The Organisation for Cooperation and Economic Development (OECD) do not share this optimism, and forecast a decline in Q4 2011 of 0.02% and a fall of 0.14 in Q1 2012. The current global financial turmoil has led the Government to state that the credit crunch which plagued the markets in 2008 has returned.
Although GMFM forecasts GM to outperform the UK economy as a whole, the ongoing economic uncertainty is still having a significant impact on GM’s economy, and in particular on unemployment. While the number of Jobseeker’s Allowance (JSA) claimants in GM fell slightly on a monthly basis, the figure of 82,000 recorded in October 2011 represents an annual rise of 9,800. Of real concern is rising youth and long-term unemployment: JSA claimants aged 16–24 in GM have increased by 4,000 on an annual basis, while the number of people in GM claiming JSA for six months or longer increased for the tenth consecutive month in October.
New data on earnings highlight that household incomes are declining in real terms, further depressing economic activity. Median gross annual wages in GM stand at around £24,000–25,000, however any salary increases in the last year have been offset by the high rate of inflation. The housing market in GM also remains subdued, having effectively stagnated since March this year.
As has been the case over the last few months, the two areas that continue to perform well are airport passenger numbers and hotel occupancy. Between January and September this year, 14.8 million passengers passed through Manchester Airport – nearly 1 million more than the same period last year. In addition, the latest hotel occupancy figures confirm the strength of the visitor economy, and the hosting of the Conservative Party Conference boosted occupancy levels to over 80.0%.
There is no denying that many of the key indicators this month paint a bleak picture of the economy as we head into 2012, and the latest forecasts and Autumn Statement only added to the expectation that things will get worse before they get better. However, there was also good news in the Statement for GM, with a number of infrastructure projects in the city being announced, from transport to superfast broadband for ‘super-connected cities’. There was also additional money for the Regional Growth Fund, all of which can further help to create the job opportunities required to drive forward a recovery in the longer-term.
You can find more detailed analysis and the data throughout the Manchester Monitor for December 2011:
DISCLAIMER
All data contained in the Manchester Monitor, and all Monitor-related reports, has been compiled by New Economy from a range of sources and is published for general information purposes only. While every effort has been made to ensure the accuracy of the data and other material contained in this report, the Commission for the New Economy does not accept any liability (whether in contract, tort or otherwise) to any person for any loss or damage suffered as a result of any errors or omissions. The information, opinions and forecasts set out in the report should not be relied upon to replace professional advice on specific matters, and no responsibility for loss occasioned to any person acting, or refraining from acting, as a result of any material in this publication can be accepted by the Commission for the New Economy.
