This week the ONS published Regional Economic Activity (GVA) data for the UK. The release contains much interesting information on annual GVA, employee compensation and gross operating surplus/mixed income, on a residence and workplace basis, by region and sector, in nominal terms. Unfortunately, the data only go up as far as 2009. Nevertheless, the data offer some interesting insights into the incidence of the Great Recession.
The data reveal, as would be expected, that the public sector acted as a buffer in all NUTs 1 regions as the growth of nominal income slowed and in some cases fell, between 2007 and 2009. See chart which shows shares of the 'public sector' in regional GVA in the two years.
Broadly, those regions which depend more heavily on the public sector and/or where manufacturing is important, such as Northern Ireland, Wales, the North East, West Midlands and East Midlands, experienced the greatest increase in their public share as the recession started to bite. Manufacturing was hit strongly during the recession.
It is therefore tragic that those regions that had to rely the most on the public sector as a buffer during the recession are now being hit badly by Cameron and Osborne's austerity programme. There's a lot more analysis to be done here, but the current pattern of unemployment rates goes some way to support that story - London is affected, I think, by a difference between resident (unemployment) and workplace (GVA in this example) indicators.
Oh, and what about Scotland? Its middling position is, I suspect, due to a relatively lesser reliance on the public sector as a buffer in the recession - its share rose by a little over one percentage point in Scotland compared to a rise of nearly four percentage points in the North East. Moreover, manufacturing held up better in Scotland, with its share of the Scottish economy remaining largely unchanged at between 11% and 12%. But in the North East the share of manufacturing fell by nearly two percentage points to just above 13%.
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