White collar jobs will drive growth

YORKSHIRE’s future prosperity rests on support services and the professions as manufacturing and financial services, the region’s traditional engines of jobs growth, dwindle over the decade, an influential economics consultancy has predicted.
Economist Roger BootleEconomist Roger Bootle
Economist Roger Bootle

The research by Capital Economics, carried out for the Yorkshire Post, highlights the difficulties in successful rebalancing of the region’s economic base.

It reveals that Yorkshire’s financial services sector has shed 12,000 jobs in the year to June.

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The consultancy, led by top City economist Roger Bootle, predicts Yorkshire’s manufacturing workforce will shrink from 265,000 this year to 231,000 in 2020.

This is because the region’s factories have failed to specialise in the out-performing automotive and aerospace sectors.

“Just as the trains can be blighted by the wrong type of snow... Regional economies can suffer, or at any rate fail to achieve their full potential, from the wrong sort of manufacturing,” said the report.

Capital forecasts the financial services workforce will recover from 75,000 this year to 80,000 by 2020, but will still be well below the 90,000 of 2012.

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It blamed the legacy of mis-selling and increasing technology for the reduction in head- count.

The consultancy was cautious about the prospects of Yorkshire’s digital, communications and media sector, which includes computer game and TV production.

It said the sector will add 4,000 jobs to 69,000 by 2020, but lacks scale compared to the North West and remains vulnerable to consolidation and clustering effects elsewhere.

On the positive side, Capital believes that the professions – accountants, lawyers, scientists and management consultants – and support workers in call centres and facilities management roles will be “very important drivers of jobs growth in the region”. It said these sectors will create nearly 45,000 jobs over the next seven years to employ 269,000 people in the region.

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Richard Holt, regional economist at Capital and author of the report, told the Yorkshire Post that there are “huge opportunities” for the region in outsourcing the work of local authorities.

He also identified the onshoring of support service roles from overseas as an opportunity for Yorkshire’s economy because of the region’s skill base, proximity to London and quality of life.

Mr Holt concluded that Yorkshire will participate in the improving national economy, rather than play a leading role. His report shines a light on the lingering effect of the financial crisis on the region, which was hit by the collapse of lenders Bradford & Bingley and Halifax Bank of Scotland in September 2008.

“Five years on and Yorkshire, like almost everywhere else, still has scars to show – not least exactly double the number of people claiming unemployment benefits – 148,000 compared with 78,000,” said Mr Holt.

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“Employment, however, is slightly up, as it is nationally. Indeed the region’s economy appears to have broadly mirrored the UK economy over the period, with possibly a slightly deeper recession and one that lasted a little longer.”

He added: “Employment did particularly well in 2012 and GDP growth was probably higher than that of the UK.

“We estimate 0.9 per cent compared with 0.2 per cent.

“For 2013, we suspect that the region’s economy is tracking the UK, with a GDP rise of 1.3 per cent.

“ONS data suggest that employment has been weak, but the purchasing managers index activity has been strong.”

Founded by Mr Bootle in 1999, Capital provides research on the US, Canada, Europe, Africa, Asia and Australasia, Latin America, the Middle East and the UK.