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How North East long-term prices outpace earnings

Prices of some key products and services have outpaced the earnings of North East workers not just in the recent period of high inflation but in the longer term, according to new analysis by the North East Local Enterprise Partnership (NELEP).

The cost of electricity, gas and other fuels has risen by 88% since 2014 while median pay rises in the region have been only 31% compared with the UK average of 33%.

Transport services at 43% have also outpaced earnings while increases in council taxes and rates (31%) and dental services (30%) have also been high over the longer term.

Research presented to NELEP’s annual ‘Our Economy’ event yesterday shows that 88% of North East residents say the cost of living has increased; 92% said food prices have increased; and 80% said gas and electricity bills have increased.

Over half said they are spending less on essentials and using less fuel; and just under a fifth have used savings and/or credit as a result of the cost of living crisis.

The figures, including some drawn from the Office for National Statistics, are included in a summary of the North East economy presented to the NELEP event by the organisation’s Strategy and Policy Director, Richard Baker. Other key points included:

  • The post-Covid recovery continued in 2022, with strengthening demand in sectors and places; trade growth in key sectors and recovery in automotive; UK-leading inward investment performance, with a strong forward pipeline; and continuing growth in areas of opportunity.
  • But overall recovery is now slowing, impacting on people and business; supply-side challenges in supply chains and the labour market; output impacted by national and international context; the distinctive challenge of economic inactivity [mentioned here yesterday in relation to the monthly labour market statistics]; and slower growth for other sectors;
  • Since February 2020 retail and recreation visits have recovered to above 5% above pre-Covid levels in Northumberland but are down by 13% in Gateshead and by 11% in Newcastle;
  • The online job adverts index (February 2020 = 100) in now 138 in the region compared with 111 for England;
  • There were 351 new jobs from foreign direct investment per 100,000 working age adults in the region in 2021-22 compared with 300 in London and 129 in England excluding London, and there is a strong forward pipeline of projects being worked on;
  • Health and life sciences has seen strong employment growth since 2020 in the NELEP area (60%) in a relatively small but high value sector; knowledge intensive business services have also seen a significant increase (17.5%), as have transport (43.8%), construction (20.0%), and education (11.7%); growth for other opportunity areas such as advanced manufacturing, digital and energy has broadly been comparable to overall employment in growth in the region (4%).


Future challenges for North East businesses include:

  • Forty-one per cent of businesses had difficulty recruiting employees in September 2022, the highest regional percentage (England 35.5%);
  • The most common reasons for difficulties in the North East were lack of qualified applicants and low volume of applicants;
  • Lack of attractive pay offers affected the North East more than England as a whole;
  • Whilst overall trade volumes and values strengthened, the number of businesses exporting has continued to fall.

Economic inactivity

  • There is strong demand for labour, high numbers of pay-rolled employees, and high vacancy rates; but employment rate and unemployment rate are falling; the region has a distinctively high economic inactivity rate as people of all ages left the labour force, particularly older people; causes include health challenges – including Long Covid, and also evidence of a trade-off between incomes and costs of caring.

Costs and prices

  • Cost of labour (30%) and materials (36%), and economic uncertainty (37%) were the most common challenges impacting businesses’ turnover in the North East; shortage of labour (23%) and competition (20%) have also been identified as common problems.
  • Thirty-two per cent of North East businesses said their turnover increased in September; 23% said the price of their goods and services increased in September; nearly half (49%) think the price of their goods and services will remain the same in November; for businesses expecting goods prices to increase, energy prices were overwhelmingly the reason (45%).

You can see all documents relating to ‘Our Economy 2022’ on the NELEP website here.