Growing sense of optimism among business leaders after GDP increase
Prime Minister David Cameron has hailed a 0.8% increase in GDP as a sign the UK economy is "turning a corner" although opponents have said the burgeoning recovery is not keeping pace with the rising cost of living.
Regional business leaders have said the pick-up reflects a growing sense of optimism among local companies now looking to expand, invest and recruit locally, despite increasing energy prices and other costs.
The Office for National Statistics revealed yesterday that the economy grew at its fastest pace since 2010 between July and September.
Overall, GDP was 1.5% ahead of the same period last year, although the economy remains 2.5% off its pre-recession peak at the start of 2008.
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Across the UK, economy-driving sectors including construction and production have picked up, although are still more than 12% off their pre-recession peaks.
Manufacturing improved 0.9% in the third quarter, while construction was boosted by new work on private housing and private commercial building as well as domestic home repair and maintenance.
Housebuilders have been buoyed by the Government's Help to Buy scheme, which recently launched a new phase offering mortgage guarantees. Across the region, work has begun on building almost 12,000 new homes since the beginning of the year.
A 19% increase in regional exports shows how manufacturers and service providers are helping buoy the South West economy, with a value of £3.45 billion.
Chris Garcia, CEO of the Heart of the South West LEP, said that the GDP growth reflected a confidence felt across the regional business community, although he stressed that improved transport links are crucial to ensure the region can compete.
He said: "The marine and advanced manufacturing sectors are showing the strongest potential for growth.
"Energy is also very much to the fore and we are hugely relieved by the Prime Minister's commitment to Hinkley, given its ability to transform the economy of the South West and beyond."
Chris Pomfret, chairman of the Cornwall and Isles of Scilly LEP, said: "We are certainly seeing encouraging signs of business optimism. The latest business confidence survey conducted by Cornwall Chamber of Commerce suggests that two-thirds of our businesses expect turnover to increase in the next 12 months and more than half expect to see an increase in profits."
South West statistics reveal that the number of jobless over-25s is falling, with the current 4.2% unemployment rate the second lowest in England.
However earlier this month, Cornwall Chamber chief executive Kim Conchie warned that some businesses were struggling to recruit, saying there was an apparent "disconnect" between employers and school-leavers.
Phil Orford, chief executive of the Forum of Private Business, said: "A steady recovery continues with a second consecutive quarter of good growth. But he warned: "Businesses, like consumers, are facing a lot of upward cost pressures at the moment. When looking at how to dampen energy price rises and other cost pressures for households, the government shouldn't ignore that businesses are facing similar challenges."
John Allan, national chairman of the Federation of Small Businesses, said while member confidence was increasing across UK regions, a wage squeeze coupled with energy price rises would mean households having less to spend. According to government statistics, the average regional weekly wage has risen by 2.6% from last year to £521. Workers bring home an average £473 a week nationally – while energy price hikes will add around 10% to household bills.
Shadow Chancellor Ed Balls yesterday gave a cautious welcome to the latest GDP figures, but said: "For millions of people across the country still seeing prices rising faster than their wages, this is no recovery at all."