Region can rise above cuts - Bank of England agent

Paul Fullerton predicted that the regional economy would see a broad recovery within the next two to three years. And he called on Yorkshire businesses to help maintain the region's confident image to the outside world to help attract new investors.

He made the comments in his first Press interview in a move by the Bank of England to increase awareness of its presence and activities in Yorkshire.

Mr Fullerton meets with around 700 companies a year to discuss business conditions and gather intelligence for the Monetary Policy Committee, which meets each month to set interest rates.

Asked about the prospects for Yorkshire's economic recovery, he told the Yorkshire Post: "Yorkshire businesses have a long history of being able to adapt to economic change and this time I do not see this being any different.

"Most sectors are now reporting trading conditions having stabilised, if not always above pre-recession levels. Nothwithstanding the forthcoming reductions in public spending, and the ongoing process of banks repairing their balance sheets, the current modest recovery is expected to continue.

"Looking forward, the forces of globalisation mean Yorkshire prospects for recovery are also partly dependant on our success in exporting to international markets as well as conditions in the UK."

Mr Fullerton added: "I have no crystal ball but I believe that in two to three years down the line there will have been a recovery across a range of companies and sectors rather than one or two. That's what happened in previous recessions. And Yorkshire does have a diverse economy which will help this broad recovery."

He said the biggest obstacle to growth is weak demand and an associated lack of confidence to invest in capital and employ people, based on his feedback from businesses.

He added: "Of course, it will take time for the economy to recover fully, given the severity of the recession. But we are now seeing a recovery and, as that progresses, confidence should return.

"In that sense, it is important that we retain a confident image of Yorkshire to investors outside the region. For example, the recent award-winning Welcome to Yorkshire campaign shows what can be done to help our important tourism sector."

Asked what could be done to stimulate private sector growth in the region, Mr Fullerton said: "The most important contribution the Bank of England can make is to promote a durable economic recovery amid an environment of low and stable inflation for the health of Yorkshire and the national economy.

"Against that supportive backdrop, it's a matter for the Government and most importantly business leaders to help foster the conditions in which enterprise, innovation, investment and skill development can flourish."

He said his contacts are reporting growing export opportunities for manufacturing and service sector companies, particularly in the Middle East, Asia, India and Latin America.

On the matter of quantitative easing, he would not be drawn on whether the Bank should pump more money into the economy, saying "that's a matter for the MPC to decide".

He added: "The MPC meets each month to review the economic data, including reports from the Bank's agents around the UK, and judges whether it is necessary to alter the level of bank rate or the scale of the asset purchase programme in either direction to meet the 2 per cent inflation target.

"At its latest meeting in November... the MPC judged that the existing levels of bank rate and scale of the QE programme were the ones most likely to ensure that inflation is close to the target in the medium term."

Opinion has been divided among commentators on whether QE has been a success.

When asked if he thought big banks should be broken up, Mr Fullerton said he looked forward to the findings of the independent banking commission on the future of the industry.

Speaking in support of the building society movement, Mr Fullerton said: "Mutuals have long been a key part of the UK's economy, particularly in Yorkshire and are a vital part of the competitive banking system."

Mr Fullerton joined the Bank of England as deputy agent in Yorkshire and the Humber in 2000. He was promoted to agent in 2006. While he has contacts at most of the main businesses in the region, he would like to hear from new companies that would be willing to speak about business conditions.

He said: "At this particular time in the economic cycle it has never been more important for us to hear from the business community. When you are coming out of recession, economic data can be extremely volatile. One month you get an indicator saying there's a recovery. Next month it's not so good.

"What I get from the business audience is an understanding what's happening now across a range of economic indicators and what they think is going to happen. That's immensely helpful.

"When you talk to me, you are talking to the MPC. I'm the Bank's eyes and ears in the region."

Across the UK, the Bank of England has 12 agents and 14 deputy agents and 8,000 business contacts to help inform its decision making.

Mr Fullerton's deputy is Marilyn Watson, who joined a year ago after a career spent largely with JP Morgan, the investment bank.

BORN into a coal-mining family in County Durham, Paul Fullerton, 58, described his upbringing as the "archetypal Monty Python, live in a cardboard box" poverty of the North of England of the 1950s.

The grammar school boy read economics at Hull University and achieved a first class degree. He started a Phd on the tertiary sector in 19th century Britain with special reference to Hull, but never finished, choosing instead to join Yorkshire Bank to help pay off his mortgage.

He spent nearly 25 years at the bank, holding key roles such as head of business banking and head of retail banking, before being made redundant in 1998.

He now considers himself a very lucky man though.

"Despite my North East accent and Newcastle support, since 18 I have been in education and spent most of my working career in Yorkshire. I think it's a fantastic county. I have also gone back to do economics and what a decade to do it.

"The greatest financial crisis since World War One. The greatest financial deficit since World War Two. Interest rates are at a level we have never seen in the Bank's 300-year history. Then there's this amazing opportunity to talk to business –- that's a very privileged position."