Transport and the economy

Memorandum from the North East Chamber of Commerce (NECC)

The North East Chamber of Commerce (NECC) is the North East’s leading business membership organisation and the only regional chamber of commerce in the country, representing more than 4,500 businesses located in Northumberland, Tyne and Wear, Durham, and the Tees Valley. Our members are drawn from all sizes of business across all sectors and employ about 30% of the region’s workforce.

Since the publication of the Eddington Report in 2006 the UK’s economic conditions have changed dramatically. At the beginning of 2009, following two quarters of negative economic growth, the UK economy entered into a recession which officially lasted 12 months, however the impact of the slowdown is still very much evident for many businesses.

The recession was catalysed by a systemic crisis within the financial services sector which rendered credit markets inoperable, yet also had roots in global trade and currency imbalances which have come to reflect the changing nature of the global economy within which the UK now competes.

UK economic output fell by roughly five percent during the two years between 2008 and 2010. Public sector net debt is 56% of UK GDP in 2010 with expectations that it will rise further before peaking during 2012/13.

The economic situation has improved following interventions by successive Governments worldwide to underwrite key financial institutions and stabilise credit markets, thus reinforcing an important pillar upon which rests all business activity. However the recovery is embryonic and thus fragile.

Public spending is currently under review, the government has outlined clearly its intention to eradicate the balance of the public deficit by 2014. NECC maintains that all spending decisions that impact upon the chances of UK economic recovery and growth must be taken with great caution – transport infrastructure falls within this category.

Transport infrastructure directly impacts upon the capacity businesses have to generate wealth – it is vital that investment and spending priorities reflect this.

Investment in the North East’s transport infrastructure must be protected as spending cuts are considered in the coming months and years. The money that is available must be clearly targeted at improvements to strategic links which open up access to national and international markets for businesses.

Strategic road connections to the North East remain sub-standard, with the region still not linked to the national motorway network. This must be addressed. Of immediate importance are junction upgrades on the A19 on both sides of the second Tyne Tunnel, which have been accepted into the current regional spending programme, and as the only elements of the strategic road infrastructure included should be seen as the top priority within that.

Investment in high speed rail should provide a network ensuring maximum economic benefit across the UK, including to the North East. A clear timetable for connecting different regions must be produced before the first phase is started to avoid skewing investment decisions. The North East must be linked to new high speed services from day one. However, capacity on the current East Coast Main Line will face severe pressure in the next decade so measures to address this cannot be put off.

International trade has been a vital component of North East economic success in recent years, so connections to gateway airports and ports must be strengthened. Air passenger duty threatens this as the extra cost burden will put the biggest pressure on more marginal flights to regional airports.

NECC welcomes the increasing opportunities that are arising for businesses in the arena of low carbon transport. In order to ensure that these opportunities are realised related infrastructure must be put in place as soon as possible to provide support for the emergence of this valuable component of North East industry.

September 2010