‘Region well-placed for recovery’

Bank of England deputy governor hails potential of Yorkshire in green economy

A DEPUTY governor of the Bank of England has claimed that Yorkshire is well-placed to help the nation’s long-term economic recovery as he warned of regional divides in the battle to rebuild in the wake of coronavirus.

Dave Ramsden, the deputy governor for markets and banking, said that opportunities for the Government’s green economy agenda are present in Yorkshire and that the region’s diversified economy should make it more resilient to the economic downturn brought about by the pandemic.

Speaking exclusively to The Yorkshire Post following a virtual visit to the region in which he met with both business leaders and members of the public, the former senior Treasury advisor said that while current projections pointed to a gradual economic recovery, there was a danger of it being felt at varying levels across the country.

And he added that, while negative interest rates were not under current consideration by the Bank of England, it was a move that it was keeping at its disposal should conditions fluctuate.

“We know for example that there is quite a strong basis for renewable industries in Yorkshire,” he said. “You have got those longer term, critical transitions and transformations that we have got to make and that local people seem very focused on.

“It feels like for some of those longer term challenges that Yorkshire and Humber, with quite a diversified economy, is quite well set up for.

“But that does not mean for particular cities, or towns or sectors that things are not very tough. But those opportunities for what the Government calls building better and greener, those are there.”

The Bank of England has predicted a downturn of four per cent in GDP as a result of the current lockdown followed by a gradual recovery, with finances not due to recover to pre-Covid levels until the first quarter of 2022.

Mr Ramsden said that for consumer-facing businesses, like hospitality, the fall will be much bigger but said the region’s economy as a whole was resilient.

“You have got most sectors of the economy well represented,” he said. “So that diversification should mean that across the region as a whole that there will be resilience. A lot of companies have shed staff but they will be able to be part of the recovery.”

Many households having accumulated savings due to the economy being shutdown for much of the past 12 months, leading some commentators to predict a boom in spending when restrictions are eased. However, Mr Ramsden counselled that an increase on consumer spending would vary across different demographics and regions.

“Some people have been able to accumulate a lot of savings but those people are typically more in high income brackets,” he said. “People at the bottom end of the income distribution, people who may have less job security and lower incomes, they haven’t been able to build up savings.

“So it is a balance between how much will those higher income consumers be putting back into the economy against some people who won’t have any accumulated savings, who live from day-to-day.”

There is quite a strong basis for renewable industries. Dave Ramsden, deputy governor, Bank of England.

YORKSHIRE’S market towns have fared better than its city centres during the Covid-19 crisis, with the British economy set to take on a different complexion when the pandemic subsides, a leading figure at the Bank of England has said.

Dave Ramsden, inset, deputy governor of the Bank of England who sits on its monetary policy committee, financial policy committee and prudential regulation committee, said places where people normal expect to commute from to larger conurbations had enjoyed more activity than city centres as the lockdowns and restrictions led to people shopping and spending their money locally.

Speaking to The Yorkshire Post during a virtual visit to the region, Mr Ramsden said that, while this was encouraging for market towns which tend to be home to more independent businesses, it was too early to say whether the change in consumer attitude would persist beyond Covid-19.

And Mr Ramsden, a former chief economic adviser to the Treasury, also tipped city centres to bounce back strongly once coronavirus is brought under control.

He said: “City centres are quite quiet. But market towns, as I understand it from what I have learnt today around Yorkshire, are doing better. The places where people used to commute from into places like Leeds are doing rather better. “I think there will be those kinds of changes. The question is how will that look for example in Yorkshire. It is currently too early to tell.” He added: “You will see city centres recover. Students are already back in Leeds. There is a lot of international students that are signed up to come back in a year.” Mr Ramsden said, provided the

Government’s road map to reopening the economy went according to plan, there would probably be a sharp rise in people in the UK seeking to holiday in Yorkshire from late spring onwards.

But he warned that the loss of international tourism could temper any potential boom for the sector, which has spent much of the past 12 months either completely closed or severely limited.

A keen cyclist, Mr Ramsden attended the Grand Départ of the 2014 Tour de France in the region and has cycled one of the stages of the Tour de Yorkshire route from 2017.

“I am very conscious of that kind of reliance of the tourism section,” he said.

“I think there will be lots of staycations happening in Yorkshire, presuming the road map to the economy opening up continues.

“But how much international tourism will there be, which I know in the past has been important to Yorkshire?”

Mr Ramsden added that the current downturn was markedly different from that seen during the financial crisis in that banks are far better funded now than they were in 2009. But he warned that the these institutions needed to keep lending to help firms recover.

“The position there was that the major banks were part of the problem,” he said.

“We had a major slowdown which was intensified because they stopped lending money because they had their own funding challenges and they didn’t have enough capital.

“It is very important that banks keep lending to viable businesses so that those businesses bridge through these challenging times so that they survive them and can grow through the recovery.”