2 Impact of the economic downturn
on the South West
The economic downturn in the South
West
10. The Regional Economic Profile produced by
the SWRDA describes the downturn as having started in "financial
services, construction and anything to do with property […]
UK activity plummeted after October 2008 for both production (led
by manufacturing) and services (led by retailing). At the same
time the labour market started to shrink". GVA by industry
in the UK showed mining, manufacturing, construction and distribution,
hotels, catering and retail all fell up to the end of 2008.[13]
11. The Government Office for the South West
told us of a similar pattern to that occurring nationally: manufacturing,
construction, distribution, retail and financial and business
services had all been affected.[14]
These broad views were reinforced by the witnesses from business
that we met in Swindon. Most of our witnesses agreed that construction
and retail and manufacturing were the worst hit sectors, the latter
particularly in the north of the region.[15]
Other sectors that had suffered included the 'year round' elements
of the leisure industry such as pubs, restaurants, dance schools,
gyms etc.[16] and the
professional services sector.[17]
12. We were told of some examples where the downturn's
effects were less clear. The aerospace sector around Bristol appeared
to not be affected yet, but it was suggested this was probably
because of the long lead time between a drop in orders and any
effect on production, and the CBI felt it was too early to say
whether the sector would "escape".[18]
The uncertainty around orders is a cause for concern, particularly
for the aerospace supply chain which contains a large number of
small businesses.[19]
Recent evidence suggests that these problems are starting to mount.
The large number of small businesses in the region, including
for example some in the aerospace supply chain, meant that some
secondary effects of the recession were 'below the radar' and
difficult to detect. [20]
13. Tourism was mentioned to us as an industry
whose prospects varied across the region. There were signs that
summer bookings were up in coastal areas, but less so inland,
and the hospitality market was doing quite badly.[21]
14. Agriculture is important in the South West
and would appear to have acted in a counter-cyclical manner. Rewards
have certainly have been better in the last year than in previous
years. However even this sector is not immune from problems as
we can see from the fall out in the dairy industry after the collapse
of Dairy Farmers of Britain.
13 South West RDA, Regional Economic Profile, Recession
Special, SW England, Issue 7, April 2009, p 10 Back
14
Ev 55, para 2.1 Back
15
Q 68 and Q 70 Back
16
Ev 45, para 1 Back
17
Q 68 Back
18
Q 68 Back
19
Qq 70-71 Back
20
Q 1. The FSB said that 41% of private sector firms employed less
than 10 staff (Ev 45, para 24). Back
21
Q 3 Back
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