The Regional Intelligence Unit

1
The Regional Intelligence Unit
Regional Accounts for the Northwest GVA Analysis
for NUTS 1, 2 3 Areas Gross Fixed Capital
Formation January 2004
2
The Regional Intelligence Unit

• The Northwest Economy
• 1. Regional Accounts (NUTS 1) August 2003

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GVAThe Northwest Economy 2001

• In 2001 the Northwests GVA was 87.6bn, 10 of
  the UKs total GVA
• The Northwests share of the UKs GVA decreased
  by 0.6 between 1990 and 2001
• London and the Southeast continue to dominate the
  UK economy with regional GVA of around 140bn
  each.
• Northwest is the 3rd largest of the 12 regional
  economies after London Southeast, although only
  63 of the size of the Southeast

Source Regional Accounts August 2003, ONS
4
GVA per head The UK Regions

• The performance of the Northwest has been
  steadily improving since 1998, with GVA per head
  rising to 13,011 or 89.9 of the UK average in
  2001
• In the last 2 years the Northwest has overtaken
  the Southwest in GVA per head to be ranked 7th
• The gap between the ranking of the size of the
  Northwest economy compared to its ranking on GVA
  per head reflects the continuing dependence on
  manufacturing in the region less favourable
  demographics

Source Regional Accounts August 2003, ONS
5
GVA per head Compared

• GVA per head in the Northwest has always been
  below the UK average
• Revisions to the data have meant that the
  Northwests GVA has been revised upwards,
  reflecting amendments in population estimates and
  new methods used
• In 1999 this meant a gain of 2.8pp for the
  Northwest as GVA per head was revised upwards
  from 86.9 to 89.7 of the UK average

Source Regional Accounts February 2001 August
2003, ONS
6
GVA per head Data Revision

• The Northwest and London were the main
  beneficiaries from data revisions. As a result
  the published GVA per head in 1998 in both
  regions gained 2.5pp
• The new accounts show the gap between Northwest
  UK economic growth rates has narrowed
• East of England was the main loser from the data
  revisions, with a downward revision of 7.4pp in
  1998

Source Regional Accounts August 2003, ONS
7
GVA Regional Growth Rates

• The Northwests GVA grew by 63.5 between
  1990-2001. The Northwest was ranked 8th out of
  the 12 UK regions
• The highest growing regions were located in the
  Greater Southeast Northern Ireland
• Although the Northwest was the fastest growing
  northern region it still grew below the UK
  average of 74.3

Source Regional Accounts August 2003, ONS
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Northwest Leading Sectors 2000

• Manufacturing was the biggest sector contributor
  to Northwest GVA in 2000 at 22.4
• The second largest contributor was real estate
  business activities at 19.1
• Private services accounted for 52.0 and public
  services 18.3 of Northwest GVA
• 1990-2000 saw a marked shift from manufacturing
  towards services. Manufacturings share fell by
  8.1pp, private services share rose by 5.4pp and
  public services by 2.9pp

Source Regional Accounts August 2003, ONS
9
Growth Sectors in the Northwest 1990-2000

• Real estate business activities was the fastest
  growing sector between 1990-2000 at 117, and
  contributed most to the gain in regional GVA with
  8.9bn
• The next largest contributor was the wholesale
  retail sector which grew by 80 and added 5bn to
  regional GVA
• Education and health social work both more than
  doubled in size, together adding 6.2bn
• Agriculture and energy mining were the only
  sectors to contract

Source Regional Accounts August 2003, ONS
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Sector Contribution to Northwest Growth 1990-2000

• This chart illustrates the key drivers of growth
  in the Northwest, and compares them to the UK as
  a whole
• It describes a marked change in the structure of
  the Northwest and UK economies over the 10 years
  to 2000 from manufacturing to services
• The biggest economic driver for both the
  Northwest UK is real estate business
  activities which accounts for 28 of the NWs
  growth in GVA, although this is lower than the UK
  level of 32
• Wholesale retail have played a large part in
  the growth of the NW economy, accounting for 16
  of growth in GVA
• The public sector has played a larger role in the
  Northwest than in the UK as a whole, contributing
  nearly one-quarter of the regions growth in GVA

Source Regional Accounts August 2003, ONS
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Northwest Leading Manufacturing Industries 2000

• The three largest sectors - chemicals, transport
  equipment and food, drink tobacco - accounted
  for more than two-fifths of NW manufacturing GVA
  in 2000
• The chemical sector contributed 3.2bn (16.3),
  transport equipment 2.5bn (12.6) and food etc
  2.4bn (12.5)
• The next two largest sectors - electrical
  optical equipment and pulp, paper paper
  products - both contributed 1.9bn (9.6)

Source Regional Accounts August 2003, ONS
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Northwest Manufacturing Sector Growth 1990-2000

• Contribution to growth in GVA depends on the size
  of the sector and its growth rate over the period
• The fastest growing manufacturing sectors were
  miscellaneous manufacturing (137), rubber
  plastics (48) and electrical optical (40)
• The lead contributor to manufacturing growth was
  the electrical optical sector, adding 538m to
  regional GVA
• Chemicals comes next adding 483m, followed by
  pulp paper products adding 439m
• The figures illustrate the extent of the decline
  in NW textiles and leather industries due to
  overseas competition

Source Regional Accounts August 2003, ONS
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UK Manufacturing Regional Winners Losers
1990-2000

• In 1990-2000 manufacturing expanded by just 16
  in the Northwest, half the rate of the UK as a
  whole. As a result the Northwest share fell by
  1.8 to 12.6, the most serious decline of any UK
  region
• The Southeast overhauled the Northwest as the
  largest contributor to UK manufacturing,
  increasing its share by 1.6 to 12.8
• This reflects the success of the SE in attracting
  investment in faster-growing, particularly
  high-technology, sectors

Source Regional Accounts August 2003, ONS
14
Gross Fixed Capital Formation 2000
Total 14.8bn
Source Subregional GFCF, ONS, October 2003
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Gross Fixed Capital Formation Regional Trends

• The overall investment profile differs markedly
  from that for GVA, with much lower contribution
  of the public sector to investment than to GVA,
  thereby disadvantaging regions such as the
  Northwest
• The Northwest is losing out in the competition
  for investment to the Greater Southeast. In
  1998-2000 the Northwest share fell by 1.1pp to
  9.5, whilst the Southeast share jumped 2.7 pp to
  16.6
• Despite a 5 drop in manufacturing investment in
  the Northwest in 1995-2000 and consequent 0.6
  reduction in the Northwest share of the UK total,
  the Northwest still retains the lead share among
  UK regions at 14.

Source Subregional GFCF, ONS, October 2003
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The Regional Intelligence Unit
The Northwest Economy 2. Subregional Accounts
(NUTS 2) October 2003
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GVA per head Northwest Subregions

• Figures for subregional GVA measure income earned
  at the place of work, rather than where people
  live
• The adjustment to a per capita basis reflects the
  resident population in the subregion
• This will tend to boost the GVA per head of major
  cities such as Manchester which draw their
  workforce from a wide geographical area
• Cheshire is the most prosperous of the NW
  subregions, and ranks 5th of all UK NUTS 2
  regions
• Both Cumbria and Merseyside are in the bottom 10
  of UK subregions. Whilst Merseyside has edged up
  2 places to 34th, Cumbria has dropped 7 places to
  29th

Source Subregional (NUTS2) Accounts October
2003, ONS
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Northwest Subregions Data Revisions

• New data on GVA per head reflects new
  methodologies for collecting data on GVA and the
  results of the 2001 Census
• The 2.5 pp upward revision to the Northwest
  (1998) was not spread evenly among the subregions
• Greater Manchester was the major beneficiary,
  though Lancashire and Merseyside also gained
• Cheshire, and particularly Cumbria, suffered
  losses. For Cumbria this meant a downward
  adjustment in its GVA per head index of 7 pp in
  1998 from 91 to 84 of the UK average

Source Subregional (NUTS2) Accounts October
2003, ONS
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Northwest Trends in GVA per head 1995-2001

• Against a steady picture for the Northwest as a
  whole, two features stand out
• First, the strong improvement in the economy of
  Greater Manchester, particularly marked since
  1998
• Second, the steep decline in the Cumbria economy
  with GVA per head sliding from 7 below the UK
  average in 1995 to 23 below in 2001
• In the other subregions, Cheshire has seen a
  slight decline but is still nearly 10 above the
  UK average, Merseyside holds steady but at a low
  level, and Lancashires position has stabilised

Source Subregional (NUTS2) Accounts October
2003, ONS
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GVA Subregional Growth Rates

• In 1995-2001 urban areas performed much better
  than the rural parts of the region
• Growth in Greater Manchester kept pace with the
  UK average at nearly 37
• Merseyside grew by 32 and Cheshire by 30, both
  close to the Northwest average of 31
• But the diverse economy of Lancashire grew more
  slowly, by 27
• Cumbria grew the slowest of all UK subregions,
  with a serious impact on GVA per head

Source Subregional (NUTS2) Accounts October
2003, ONS
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Subregional Contributions to Northwest Growth
1995-2000

• Greater Manchester contributed nearly half of the
  regions growth in 1995-2001, reflecting both the
  size of its economy and its strong performance
• At the other end of the spectrum, Cumbrias very
  low growth rate and the size of its economy meant
  it accounted for only 2.7 of the regions growth
• For Merseyside and Cheshire, and to a lesser
  extent Lancashire, their contribution broadly
  reflected the relative size of their economies

Source Subregional (NUTS2) Accounts October
2003, ONS
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Subregional Shares of Northwest GVA 2001
NW GVA 87.6bn
Source Subregional (NUTS2) Accounts October
2003, ONS
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CUMBRIA

• The smallest of the subregional economies,
  Cumbria has faced serious difficulties in
  1995-2000
• Contraction in manufacturing and agriculture has
  reduced the total growth in GVA to 11.4 in
  1995-2001, the lowest of any UK subregion
• More remote manufacturing facilities have
  suffered disproportionately from the fall-out
  from the Asia crisis in 1998, and cost-cutting in
  the face of increased globalisation and high
  sterling
• The high exchange rate hit farm incomes too,
  before foot and mouth disease added further
  pressures in 2000-1
• Low growth in the subregion has been evenly
  shared between public and private services

Source Subregional (NUTS2) Accounts October
2003, ONS
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CHESHIRE

• Accounting for 18 of the regions economy,
  Cheshire has benefited from strong growth in
  real estate, renting and business activities
  it contributed one-third of Cheshires growth,
  matching that in Greater Manchester
• Financial services based in Cheshire,
  particularly in Chester, contributed nearly 10
  of Cheshires growth and accounted for 60 of the
  regions growth in that sector
• The high contribution of wholesale and retail
  trade reflects the prosperity of the subregion
• Overall performance was curbed by contraction in
  agriculture and low growth in manufacturing

Source Subregional (NUTS2) Accounts October
2003, ONS
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GREATER MANCHESTER

• The largest, and fastest growing,
• subregion accounting for 40 of Northwest GVA
• Greater Manchester has seen a strong revival in
  the late 1990s, with growth matching the UK
  average of 37 in 1995-2001
• Two sectors accounted for nearly half of the
  growth in GVA in 1995-2000
• - real estate,renting and business
  activities added 5.5bn (one-third of growth)
• - wholesale and retail trade added 3bn
  (17.5)

Source Subregional (NUTS2) Accounts October
2003, ONS
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LANCASHIRE

• The second largest of the subregional economies,
  accounting for one-fifth of Northwest GVA
• In 1995-2001 Lancashire GVA rose by 27, led by
  business services and wholesale and retail trade
• In contrast to other subregions manufacturing
  made a significant contribution to growth in
  Lancashire, and accounted for nearly 70 of the
  regions growth in manufacturing
• Whilst Cumbria was hardest hit by the decline in
  agriculture, the drop in Lancashire had the
  largest impact on the regions farming GVA

Source Subregional (NUTS2) Accounts October
2003, ONS
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MERSEYSIDE

• Accounting for 16 of Northwest GVA, Merseysides
  GVA expanded by nearly one-third in 1995-2001
• Apart from a contribution of over 25 from real
  estate, renting and business activities, the
  subregion remains overly dependent on growth in
  the public sector
• In contrast to the other parts of the Northwest,
  both health and education contributed more to
  overall growth than the wholesale and retail
  sector

Source Subregional (NUTS2) Accounts October
2003, ONS
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Sector Contribution to NW growth 1995-2000
Source Subregional (NUTS2) Accounts October
2003, ONS
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Subregional Contribution to Broad Sector Growth
1995-2000

• This chart describes each subregions share of
  the growth/contraction in seven broad categories
  of economic activity
• In the primary sector Lancashire bore the
  heaviest brunt of the contraction in farming in
  the NW, though because of its diverse economy the
  impact was less than in Cumbria which is more
  dependent on agriculture
• In contrast Lancashire accounted three-fifths of
  the growth in the industrial sector (70 of the
  gain in manufacturing), though growth was
  disappointing in the period
• Greater Manchester gained disproportionately from
  the strong expansion in private consumer,
  financial, business and other services
• Merseysides contribution to NW growth was in
  line with the size of its economy except in
  public services where it accounted for 27 of the
  growth 1995-2000

Source Subregional (NUTS2) Accounts October
2003, ONS
30
Investment The Subregional Picture

• Total investment in the Northwest fell 5.6
  between 1999 and 2000 to 14.8bn
• Investment in manufacturing peaked in 1998 at
  3bn. The downturn has been concentrated in
  Greater Manchester and Lancashire where spend was
  200m lower in 2000 than at the peak, with
  implications for future employment prospects.
• Despite a 24m decline in manufacturing
  investment in Cumbria in 1998-2000, the 2000
  figure was 200m higher than in 1995, a gain of
  nearly 50
• Within the Northwest Lancashire has been worst
  hit, with a decline of 1.6bn in total investment
  in 1998-2000, of which manufacturing accounted
  for 200m and real estate business services
  1.2bn

Source Subregional GFCF, ONS, October 2003
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The Regional Intelligence Unit The Northwest
Economy
3. Subregional Accounts NUTS 3 December 2003
32
NUTS 3 Share of Northwest GVA 2001

• Greater Manchester South contributed 22.9bn to
  the regional economy in 2001 - 26 of the total
• The sub region contributed over 1/3 of the
  Northwests growth in GVA 1995-2001, reflecting
  both the size of its economy and its strong
  performance
• Greater Manchester South was the also 4th largest
  NUTS 3 contributor after 3 London sub regions,
  accounting for 2.7 of the UKs total GVA

Source NUTS 3 Sub-Regional Accounts, December
2003, ONS
33
GVA per head NW NUTS 3 Regions

• Three Northwest NUTS 3 regions, Greater
  Manchester South, Halton Warrington and
  Cheshire CC, achieved GVA per head above both the
  UK Northwest averages in 2001
• In Cheshire CC this figure was 6 above the UK
  average whilst in Greater Manchester South it was
  15
• Liverpool was in between the UK and Northwest
  averages with GVA per head of 13,317, boosted by
  using residential rather than workplace
  population
• Wirral had the lowest GVA per head figure of all
  Northwest NUTS 3 regions of 8,611, less than
  half of Greater Manchester South

Source NUTS 3 Sub-Regional Accounts, December
2003, ONS
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GVA per head Data Revision

• The Northwest gained 2pp on its GVA per head
  index in 1998 from the data revisions
• Seven of the Northwest NUTS 3 sub regions gained
  from the data revisions, whilst six suffered
  losses
• Gains of 6-7pp were made by Greater Manchester
  South, Sefton and Greater Manchester North
• East Cumbria suffered the greatest loss - 12pp

Source NUTS 3 Sub-Regional Accounts, December
2003, ONS
35
GVA NUTS 3 Growth Rates

• The Northwests GVA grew by 30.9 between
  1995-2001, 5.7 below the growth rate of the UK
• The fastest growing regions were Greater
  Manchester South and Liverpool who both
  experienced growth rates above that of the UK and
  Northwest. These NUTS 3 regions contain the
  regional poles of Manchester and Liverpool city
  centres
• The lowest growth rates occurred in West Cumbria
  and East Cumbria which grew by only 12.3 and
  10.6 respectively

Source NUTS 3 Sub-Regional Accounts, December
2003, ONS
36
NUTS 3 Trends in GVA per Head 1995-2001

• Greater Manchester South Liverpool were the
  only two regions to see a consistent rise in
  their GVA per head index throughout the period
• Greater Manchester South gained 14pp 1995-2001,
  growing 13.5 and Liverpool 7pp, growing 8.2
• East and West Cumbria together with Blackburn
  with Darwen experienced steep declines in their
  GVA per head index, losing 15, 13 and 12 pp
  respectively
• This is partly due to growing population levels
  within these sub regions, arising from increased
  migration into Cumbria and a higher birth rate in
  Blackburn with Darwen

Source NUTS 3 Sub-Regional Accounts, December
2003, ONS
37
GVA Broad Sector Shares 2000

• Services accounted for over 80 of GVA in
  Blackpool UA, Liverpool and Sefton, compared to
  just 45 in West Cumbria, the only NUTS 3 area
  where industrys share was above 50
• Industry plays a significant role elsewhere,
  accounting for more than 30 of GVA in Cheshire
  CC and Greater Manchester North, and close to 40
  in East Merseyside, Lancashire CC and Blackburn
  UA
• East Cumbria gained 4.3 of its GVA in 2000 from
  Agriculture, the largest share of all the
  Northwest NUTS 3 regions

Source NUTS 3 Sub-Regional Accounts, December
2003, ONS
38
Information Sources

• The RIU Extranet
• Summary Report
• Summary Datasets for the Northwest
• Analysis of the Regional and Subregional Accounts
  
• Gross Fixed Capital Formation for the
  Northwest
• ONS
• Regional gross value added, 14th and 20th August
  2003
• http//www.statistics.gov.uk/StatBase/Product.asp
  ?vlnk7359
• Subregional gross value added and gross fixed
  capital formation, October 31st 2003
• http//www.statistics.gov.uk/StatBase/Product.asp
  ?vlnk10797
• NUTS 3 gross value added, 3rd December 2003
• http//www.statistics.gov.uk/statbase/Product.asp
  ?vlnk10904Moren
• Map of the Northwest NUTS regions
• http//www.statistics.gov.uk/geography/downloads/
  NWNUTS.pdf