£71bn challenge to region
‘UNTAPPED’ business potential in the region could add £71bn to UK economy by 2025 generating thousands of new jobs, if companies become more productive and export more, according to a report.
Research from business advisers claims that shows that UK GVA (Gross Value Added) could be boosted by £479bn by 2025 if GVA per worker in every region matched the G7 average (excluding the UK itself).
In the North West region, matching the G7 average would result in a £71bn. This would represent the largest single contribution of any UK region.
The areas where the UK lags behind the G7 average are value of export markets and average productivity levels per worker and improvements can also be made in regards to health and skills.
The study shows that productivity in the region sits at 90% of the UK average which in 2014 was at a record low of 18% below the rest of the G7.
The study says that increasing exports by 18 percentage points to 45% of GDP, the level achieved by Germany, would lead to an additional £84bn of economic output being unlocked. The North West currently contributes just 9% of overall UK exports behind London, the South East and the West Midlands.
Despite this opportunity for growth, Grant Thornton’s research reveals that fewer than half of UK businesses currently identify international markets as a potential profit booster.
Carl Williams, North West managing partner at Grant Thornton, which has offices in Manchester and Liverpool, said: “This new analysis makes for fascinating reading for anybody with an interest in the economic growth potential of the North West region as a whole.
“The North West is the homeland of the industrial revolution and its spirt of effort, determination and entrepreneurism is alive and well. We really believe that these gaps to G7 averages can be closed and surpassed in the coming decade.”
The study marks the launch of Grant Thornton’s Vibrant Economy agenda, a nationwide Inquiry to unlock the shared potential of the nation by working with cities, communities and the corporate, public and third sectors to jointly develop new solutions.
Along with exports, skills shortages are still holding businesses back. Filling all job vacancies that are left empty due to skills shortages could provide an £8.9bn boost to the UK economy by 2025.
Responding to the report, Clive Drinkwater North West director of UKTI, which is the government unit responsible for growing exports said: “As the report rightly points out, there are many businesses in the region who are unaware of the benefits exporting can bring, and that’s why we’ve launched the Exporting is GREAT initiative and the ExportSavvy website – both of these make it easy for first time exporters to find out how they can enter new markets and transform their companies into global players.”
He said there are now more than 80 Export Champions in the region – existing exporters who led their experience in global markets to inspire and motivate other companies.
He added: “While encouraging new exporters is key, we also need companies with an existing international presence to do more. This is why I’ve introduced my One More Market challenge – if every business that exports from the North West were to expand into an extra territory, it would go some way to unlocking the £84bn of economic output discussed in the Grant Thornton report.”
“To reach our potential, we need to do more in the BRIC nations and my own set of the next four high growth markets MIST (Mexico, Indonesia, South Korea and Turkey) – they represent half of the world’s population and account for 33% of its GDP yet only 17% of exports from the North West go there.
“This is not sustainable in the long term, particularly when all the real economic growth for the foreseeable future will come from these and other emerging markets. “