Business confidence rosier in the North than the South

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The Independent Online

The traditional North-South divide of economic fortunes is being reversed, the UK's largest employers' organisation claimed yesterday.

The traditional North-South divide of economic fortunes is being reversed, the UK's largest employers' organisation claimed yesterday.

There are "tentative" signs of a new split between business in the Celtic regions, which are enjoying a recovery, and the core English regions in the South and Midlands.

Manufacturers in Scotland, Wales, Northern Ireland and the North-east of England enjoyed a revival in business confidence and output in the second quarter of the year, the Confederation of British Industry said. In contrast, the South-east, South-west and the East and West Midlands saw optimism and business activity slide.

If the pattern is sustained, it will mark a reversal of the historic split between a booming services-oriented South and a beleaguered metal-bashing North. But the survey also highlighted concerns that these regions would be unable to sustain growth, as the legacy of decades of decline had left them without the skilled workforce needed for a non-inflationary boom.

The survey was conducted by the CBI and Business Strategies, an independent firm of analysts. Hann-Ju Ho, senior economist at Business Strategies, said: "There is tentative evidence of a new North-South divide."

The breakdown showed that Wales was the only region to enjoy a rise in confidence, export orders and export deliveries. The North-east, Scotland and Northern Ireland alone saw a rise in export optimism while export orders and confidence rose in Scotland.The North-east was also the only region to be positive about plans to invest in plant and machinery.

In contrast, export optimism fell sharply in the South-east and West and East Midlands, while total orders fell rapidly in the West Midlands and the South-east. Firms in the West Midlands were the most pessimistic.

The survey showed skills shortages to be most pronounced in the North-east, which has relatively high unemployment, and Northern Ireland. In both regions 20 per cent of firms said this inhibited growth. Sudhir Junankar, a senior CBI economist, said: "It shows there is a requirement for investment in skills." Mr Ho said: "We are seeing a 'brain drain' from the North-east and possibly the North-west, where the population is expected to fall. This could cause problems."

On Monday, a separate report said there was a severe mis-match between skilled workers and vacancies. Cambridge Econometrics said a quarter of the 1.1 million unemployed in the UK were in areas with higher-than-average levels of vacancies.

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