Home News Why Cumbrian businesses can be positive about 2018

Why Cumbrian businesses can be positive about 2018

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Crystal ball

There’s a strong likelihood that Cumbria’s economy will outperform in 2018.

While the rest of the country appeared to be preoccupied with Brexit, businesses in Cumbria made steady progress this year, building firm foundations for future growth.

The tourism sector is a case in point.

When the final figures for 2017 are published, we anticipate that visitor numbers will exceed the total of 45m achieved in 2016, making it the fifth consecutive year of growth for tourism in Cumbria.

Rob Johnston, Chief Executive of Cumbria Chamber of Commerce, expects the trend to continue in 2018.

He said: “We know that tourism is hugely important – it’s worth £2.72bn to the county’s economy and supports more than 36,000 full-time-equivalent jobs.

“The sector has certainly benefited from the weakness of the pound since the EU referendum, which has made it cheaper for overseas visitors to come and boosted the number of ‘staycations’ as more Brits holiday at home.

“The inscription of the Lake District as a World Heritage Site this year should give a further boost in 2018.

Windermere “We mustn’t be complacent though. We’re pleased that Gill Haigh, the new managing director of Cumbria Tourism, wants to promote tourism in areas of potential outside the Lake District National Park.

“And we’re keen to see new attractions come on stream particularly in the adventure tourism sector, which has great growth potential. Treetop Trek’s proposal for a zipwire across Thirlmere is a good example.”

If Cumbria’s economy suffered a setback in 2017, it was surely GSK’s announcement that it was cancelling a £350m investment in a new pharma plant at Ulverston and putting its operation there up for sale.

Rob said: “GSK is planning to dispose of its Ulverston site as part of a wider sale of its cephalosporins antibiotics business.

“While cephalosporins aren’t part of GSK’s long-term plans, they have told us that the division remains profitable. Given that, and the skills of the Ulverston workforce, we are cautiously optimistic that a buyer will come forward.”

The prospects for Cumbria’s nuclear sector certainly look brighter than they did this time last year. Back then, a financial crisis at Toshiba was threatening to scupper NuGen’s plans for a nuclear power station at Moorside, Sellafield.

Toshiba’s involvement now looks set to end with the Korea Electric Power Company (Kepco) ready to invest in NuGen in its place.

Kepco's APR1400 reactorsRob said: “2018 was supposed to be the crunch year for Moorside when NuGen made the pivotal decision on whether to proceed.

“We know that the timetable has slipped. Crucially, Kepco will need to get regulatory approval for its APR1400 reactor design. But we’re much more confident that the project has a future.

“The Chamber has consistently argued that the Government has to invest directly in nuclear new build, alongside the private sector, to de-risk these projects and so reduce the price of the electricity they will produce.

“We’re delighted that the message appears to have got through and the Government is on the threshold of agreeing to this.”

He added: “There was another significant development in nuclear in 2017 with the publication of Corporate Strategy and Transforming Sellafield documents that map the way forward as reprocessing at Sellafield draws to a close.

“The fog has lifted and we can be much more positive about the outlook for the nuclear industry than was the case a year ago.”

But what about the national picture?  Cumbria’s prosperity is inextricably linked with the outlook for the UK as a whole.

The British Chambers of Commerce expects the UK economy to grow by only 1.1% in 2018 as consumption and business investment remain sluggish.

There’s a lot for Cumbria to be optimistic about. There are genuine opportunities ahead, as well as challenges.

Rob said: “This is a lacklustre figure but at least the economy is still growing.

“On a more positive note, we think inflation [currently 3.1%] is close to its peak and should start to fall in 2018 as the impact of the post-EU referendum slide in sterling fades. And we don’t expect any increase in interest rates in 2018.”

He continued: “Brexit uncertainty is still affecting businesses, delaying investment decisions. The sooner we get clarity on the UK’s future trading relationship with Europe the better for everyone.

“The Chamber has been clear in its ask from government on Brexit.

“We want to maintain tariff-free trade with the EU, with minimal customs formalities, and adopt a post-Brexit immigration policy that allows businesses to recruit from the EU to meet skills shortages.

“There are around 10,000 EU workers in Cumbria and research we carried out in 2017 confirms that the hospitality and food processing industries, in particular, are heavily reliant on them.

“Restrictions on migrants would compound problems around an ageing workforce. Cumbria needs 80,300 additional workers by 2021 to replace those lost through retirement and outmigration, and fill new jobs created by then.”

The Chamber continues to lobby government to reform business rates and to improve Cumbria’s infrastructure – transport, broadband and mobile phone.

Rob said: “The Government promised in 2016 that the A66 would be upgraded to dual carriageway between Penrith and Scotch Corner.

“We want to see progress on this pledge in the year ahead, progress on the flood defence works promised after Storm Desmond in 2015, and an accelerated roll out of superfast broadband and 4G phone coverage.

“2018 should see the start of scheduled passenger flights from Carlisle Airport to London Southend, Belfast and Dublin.

“We’ve been supportive of Stobart Group’s plans for the airport. Having a functioning airport is hugely symbolic for Cumbria. We see the Dublin route as particularly attractive as Dublin is a hub airport with onward connections to the US, Canada and other destinations.”

He believes that a devolution deal will be the key to unlocking other transport improvements that Cumbria needs, such as the Northern Access Route for Kendal and upgrading the A595 between Carlisle and Sellafield.

Road and railHe said: “There was a real prospect of this at the end of 2015, when the then Northern Powerhouse Minister indicated that a deal was close.

“But for one reason or another it didn’t happen.

“We’re encouraged that the Chancellor, Philip Hammond, mentioned a ‘Borderlands Growth Deal’ in the November Budget.

“This would involve Cumbria, Northumberland, Dumfries and Galloway and The Borders, and should bring devolved spending.

“It’s a positive development and we hope to hear more on this in 2018.”

Likewise, 2018 is set to be a pivotal year for Cumbria Local Enterprise Partnership, which will appoint a new chairman and adopt new governance arrangements to make it more transparent and accountable.

Rob added: “There’s a lot for Cumbria to be optimistic about. There are genuine opportunities ahead, as well as challenges.

“Our role at the Chamber is to help businesses seize the opportunities and overcome the challenges, and we’ll be working hard to do that in 2018.”

 

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