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North East economy falling further behind rest of country, report says

The North East economy is falling further behind other parts of the country, with setbacks in all but one of official targets set to improve the region’s fortunes.

The North East LEP has six measures it uses to plot the region’s economic progress, with hopes that a plan started in 2014 would level up the local economy within a decade.

But the LEP’s latest annual report has found that factors such as Brexit and the Covid pandemic have set back previous progress, with the gap between the North East’s economy and other parts of the country widening in recent years.

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The main target to increase employment in the North East by 100,000 between 2014 and 2024 suffered during the pandemic, with total employment in September 2021 26,000 lower than March 2020. The numbers of ‘better jobs’ – another key target for the LEP – had also fallen, by 14,000.

Targets to reduce the North East’s gap to the rest of the country in private sector employment density, economic activity rate and productivity have also widened, though the employment rate gap has reduced.

The LEP also highlighted a sharp increase in the number of working age people leaving the labour market and becoming economically inactive, saying: “During 2022/23, we will monitor whether this is a long-term trend and analyse the reasons why people are becoming inactive.”

In the report, LEP chief executive Helen Golightly says: “At the North East LEP, we have always been clear – we have a plan to create more and better jobs for our region. Our Strategic Economic Plan is built on evidence and partnership and it has made an impact.

“The Strategic Economic Plan has continued to define our direction of travel as we strive to create a stronger, greener and more inclusive economy for the region. We have continued to navigate through the impact of the UK’s departure from the European Union and remained delivery focused despite a policy vacuum caused by delays to the Levelling Up White Paper and national LEP review.

“We’ve continued to develop our understanding of the labour market so that we understand if our activity is working, or if we need to pivot or accelerate activities to meet changing circumstances and influence partners and government.”

Earlier this week, the latest unemployment figures showed a big fall in joblessness in the North East, though the region still has the highest rate of unemployment in the country and economic inactivity has topped 25% of the working age population.

The LEP report highlights how businesses have had to deal with a number of challenges during the year, including the Covid pandemic, supply chain disruption, rising costs and new working practices. But it says many have adapted and put in plans to drive their recovery and growth.

It also highlights growth in key sectors of the economy, with more jobs created in the health and life science sector over the past two years than in the previous 10 years, and thousands of jobs being created in the energy and net zero sectors.

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