We've collected some answers to frequently asked questioned about the Unlocking Regional Growth report and related issues.
Unlocking Regional Growth
Midlands Engine
Brexit
Unlocking Regional Growth
Why is economic rebalancing important?
Economic rebalancing is a subject that we as a national law firm feel passionate about. We represent businesses throughout the UK and believe that they should all have a level playing field. We recognise that growth in London is important and essential for the UK’s prosperity. However, We do also believe that much more needs to be done to tackle the economic disparities that exist in the UK.
We launched our own UK Powerhouse report in October 2015. This in-depth white paper combined economic insight and forecasting from a leading think tank, the Centre for Economic & Business Research (CEBR), along with findings from a survey of business owners from across the UK. The report found that the economic gap between London and the North of England was expected to grow by 94% to £110billion over the next 10 years.
Our follow-up quarterly ‘tracker’ studies reveal that little progress on closing the gap has been made. This is one of the many reasons why we wanted to get involved with and are fully supportive of the CBI’s Unlocking Regional Growth agenda.
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Do businesses in different regions need different types of support to help them grow?
We work closely with our clients and recognise that businesses around the country, irrespective of their sector, operate within an uncertain economic environment. Technology also presents as many challenges as it does opportunities. We invest time in our clients and work hard with them to manage these issues.
However, the causes of the current economic differences that exist are complex and in order to tackle them, it is important to understand what caused the problem in the first place. Different regions have different strengths and weaknesses and it is important to acknowledge that different regions have:
- different historic levels of infrastructure and investment,
- different skill bases,
- different levels of entrepreneurship,
- different levels of public sector dependence
Dealing with these issues requires close understanding of the region and is of course a strong argument in favour of devolution and giving more powers to those people who really understand the region. The unique scorecards that the CBI is using as part of this campaign highlights that regions require different support in order to create the biggest gains in productivity possible.
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Why did you partner CBI on this campaign?
We are proud to be a partner and welcome the CBI’s fresh input and authoritative voice on the complex issues of encouraging regional economic growth. Their statistics-based approach allows for opportunities to be easily identified and for input to be targeted accordingly.
We support the four drivers of increased productivity identified by the CBI's Unlocking Regional Growth report – particularly ‘better management practices’ which can help address poor productivity across a range of sectors. We work closely with businesses of all sizes to understand their ever changing economic environment in which they operate and how this impacts on their business and objectives.
Like the CBI, Irwin Mitchell has a passion for helping businesses achieve their goals. We pride ourselves on helping organisations grow and we work hard to get to know their businesses and the sectors in which they operate. As part of a national firm with offices throughout the UK, our teams have real insight into the regional differences that businesses face.
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What are the similarities between Irwin Mitchell's UK Powerhouse report and CBI’s latest study?
There are some very close similarities between the calls for action within our first UK Powerhouse study and the recommendations made in the Unlocking Regional Growth report. For example, we have both highlighted the importance of education and skills and how improved transport infrastructure between cities can boost productivity by widening access to skilled labour.
With the mayoral elections in a number of cities and regions now fast approaching, we also support the CBI’s timely call for placing productivity and economic growth at the heart of devolution.
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Midlands Engine
Midlands Engine and Northern Powerhouse – aren’t they just marketing gimmicks?
No, they aren't - as long as there is real action and all parties are engaged.
There were clearly concerns that these projects championed by George Osbourne might fade away once he stepped down as Chancellor, but there are promising signs that both the Midlands Engine and Northern Powerhouse are continuing to move forward. For example, the West Midlands will be getting its own elected mayor next year will be an important milestone in promoting enterprise in the area. Philip Hammond's Autumn Statement has also committed to significant infrastructure investment that will greatly benefit both regions.
Irwin Mitchell is very supportive of both projects and welcome the CBI’s campaign to further promote regional growth.
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What does the future holds for the Midlands Engine?
Irwin Mitchell has a large office in Birmingham and our staff work and live in the community, so the future of the Midlands Engine is a definite focus for the firm.
According to CEBR’s analysis in our latest UK Powerhouse report, 176,000 new jobs could be created here in the Midlands by 2026. This number includes 14,000 new automotive manufacturing jobs – the majority of these will be in Birmingham and here in Coventry.
Despite this success, however, expected economic growth between now and 2026 is only 15% for Birmingham and 14.7% for Coventry. Cambridge and Milton Keynes are currently the fastest growing city economies in the UK and this will still be the case in 2026 where GVA growth between now and 2026 is predicted to exceed 20%.
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What is Irwin Mitchell’s view on HS2?
We welcomed the announcement in November that the government was committing to the northern phase of HS2 but it is important that this investment doesn’t divert attention from local road and rail schemes. Our survey of businesses found that senior decision makers felt that investment in local roads and rail would have a bigger impact on their company’s success than large infrastructure scheme like HS2.
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Brexit
How are businesses dealing with the uncertainty associated with Brexit?
Our experience is that businesses are taking a pragmatic approach.
One of our manufacturing clients in Birmingham, Hills Numberplates, says that the referendum result has created uncertainty but is confident that the company will continue to grow. Their MD takes the view that when the going gets tough, you just need to ‘crack on’ - and they are doing just that. We have recently advised Hills on a number of corporate deals as well as a multi-million pound funding deal in July this year.
As with Hills, we are working closely with our other business clients to analyse different post-Brexit scenarios and make sure that they are in the best possible position for future developments.
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What impact will Brexit have on the Midlands Engine?
One notable impact we have highlighted is the potential for short term issues affecting the automotive sector.
The automotive sector is at the heart of the Midland Engine and in order for it to flourish, it’s vital that the necessary steps are taken during Brexit negotiations to ensure it can thrive. As the CBI report has indicated, export is a key productivity driver and the success of the automotive sector depends on the government negotiating a suitable post-Brexit export trade deal.
Whilst the industry has had much success in forging trading ties with emerging economies such as China, Europe does remains a key market and access to the continent has provided a key support for investment into the UK from overseas car manufacturers. Negotiations on the future trading relationship following the referendum result will be an important determinant in the outlook for the automotive industry across the UK. Even premium manufacturers such as Jaguar Land Rover derive around 40% of sales from the EU.
Fortunately, given the importance of the UK market to vehicle producers in mainland Europe, there will be some considerable desire from both sides to get a deal done in this area. Assuming a deal on automotive exports is reached with the EU, the outlook for the automotive industry across the Midlands looks positive.
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Are there any other risks from Brexit?
There is already a serious issue of skills shortages with one in five vacancies in the West Midlands unfulfilled because of a lack of available skills in the labour market. Whilst cooperation with local colleges and universities will help to support the supply of skilled school leavers and graduates, the loss of an EU-wide talent pool, should negotiations take this route, could be of detriment to the continued expansion of the sector in the region.
These are just some of the immediate issues affecting this region and it is clear to us that tackling regional economic differences requires both a long and short term view as well as a close understanding of issues affecting particular sectors and parts of the UK.
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