Strategic Evidence Base : Economy
Covering data on GDP, businesses, trade and investment
Introduction
This spotlight page explores what the evidene tells us about the economic foundations of the North East.
GDP per head and productivity in the region is lower than the national average, which impacts on lower wages in the North East.
This is partly due to the sectoral composition of the region, though there are growth sectors with a significant presence in the region too such as the Net Zero sector.
International investment and trade are key drivers of growth in the North East. Goods exports and new jobs created through FDI are both above average in the region.
GDP, pay and productivity
Size of the North East Economy
Median gross annual pay in the North East
Gap in GDP per person between North East and England excluding London
GDP per person in the North East in 2022 was 18% below England exc. London and lower than most other core city areas. This reflects lower productivity (output per hour/person) and lower employment.
The GDP gap has increased since the 2008 recession, due to weaker productivity growth in the North East. The pandemic caused the biggest known non-wartime contraction in the UK’s economy.
Weaker productivity in the North East is usually attributed to a range of factors:
- Sectoral composition
- Innovation and R&D
- Business density
- Skills and labour force density
- Health
- Infrastructure, including transport links
Even though some sectors have low measured productivity, they are foundational to the economy/society – providing health, education, food, retail, transport and access to public services.
Real GDP per head over time in the North East and comparators (£)
Source: Regional economic activity by gross domestic product (ONS, last updated 24 Apr 2024, next update April 2025)
Data information: Annual estimates of economic activity by UK country, region and local area using GDP (gross domestic product). GDP estimates are workplace-based, allocated to the area in which the economic activity takes place.
"Real GDP" per head is published as the GDP "chained volume measures (CVM) per head". Changes in this measure are not impacted by inflation or changes in population, unlike changes in total GDP.
Geography: North East LEP area, England, England excluding London
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Regional gross weekly pay by GVA per hour in England
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GVA per hour worked in the North East and England over time (£)
Data information: Based on North East LEP area, national and regional data. Chart shows current price (unsmoothed) GVA (B) per hour worked data.
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Proportion of North East employment in Health
North East employment in Manufacturing
The public sector is an important employer, alongside a growing education and health sector. Retail and hospitality are big employers, providing many ‘entry level’ job opportunities. Manufacturing employment in the North East remains well above the average national levels, despite jobs falling in recent years (although manufacturing output has remained steadier).
We have seen a big rise in ‘knowledge-intensive private services’ (which include ICT, financial services and many creative industries), with the sector accounting for more than a third of employment growth in past ten years. But the knowledge intensive service sector still remains much smaller than the national average.
There are important employment clusters across all local authority areas. Advanced manufacturing, Health/life sciences and the Visitor economy are dispersed with significant clusters in Northumberland and Durham; energy companies include offshore clusters along the Tyne and Blyth. The biggest professional services and digital companies are based in city centres and business parks – but with smaller companies more widely spread.
Employment in registered enterprises, by industry group (%), North East, national comparisons
Source: Business Register and Employment Survey (BRES). ONS via Nomis, last updated 25 Oct 2023, next update 17 Oct 2024.
Data information: The 19 broad industry groups are based on the 18 used in ONS analysis, with arts, education and recreation separated from other services.
Geography: The North East LEP area, England, England excluding London. The geography is based on the location of the workplace.
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Sectors that have seen the biggest employment change in the North East region over time
Data information: North East region
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Employment in registered enterprises, key industry groups, North East local authority areas
Source: Business Register and Employment Survey (BRES). ONS via Nomis, last updated 25 Oct 2023, next update 17 Oct 2024.
Data information: The key broad industry groups shown were responsible for 73% of North East employment in 2022. They are the eight with the highest North East employment totals in that year. All totals are rounded.
Geography: Local authority areas within the North East LEP area. The geography is based on the location of the workplace.
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turnover in the North East region low carbon economy
licenced plug-in vehicles in the North East
proportion of renewable energy capacity in the North East in wind power
The North East region currently has around 7,600 individuals employed in the low carbon and renewable energy economy. Businesses in the sector have a high turnover relative to the size of workforce
The low carbon workforce is expected to grow considerably in response to the drive to Net Zero and global demand. The North East’s growth potential is based on distinctive strategic assets in electrification, offshore wind and heat networks. Modelling suggests:
- The direct wind supply chain could reach 3,500 jobs and provide £140m in GVA in the next 10 years [Cambridge Econometrics]
- 3,300 to 13,300 net additional jobs could be created from the heat networks pipeline in the North East’s economy by 2033 [Steer ED]
- A Government study found that aiming for Net Zero by 2050 could create an extra 27,000 direct jobs in the North East region through key opportunities in Energy, Transport, Buildings and Carbon Capture
There is significant domestic demand to support sector growth. The number of licenced plug in vehicles in the North East has increased 8% per quarter since 2009.
Turnover in low carbon sector sectors in the North East region (£)
Data information: North East region
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Employment in low carbon sector by subsector in the North East
Data information: North East region
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Renewable electricity generation, by technology, North East region, 2008 onwards
Source: Regional Renewable Statistics (DESNZ), 2022 data, published 28 Sep 2023
About the data: The release provides information on electricity generation from renewable sources for sub-national geographical areas. Some totals for specific technologies are suppressed or combined to avoid identifying the output of individual sites.
MWh: Megawatt hour - 1,000 kilowatts of electricity generated per hour
Geography: The North East region, one of nine English regions, includes the North East and Tees Valley LEP areas
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of all businesses in the North East are SMEs
businesses per 10,000 working age adults in the North East
of turnover in the North East is in large businesses
The North East has a relatively low number of businesses per head compared to other regions of the UK. This is because of the cumulative impact of low business births in the region, though in recent years these have been higher than England and the gap has closed. The proportion of high growth businesses and business survival rates are comparable to the national average.
The North East region has a fair share of finance deals relative to the business density (3%), but when excluding British Volt deals, the proportion of funding secured is lower than other regions. Both equity and debt funding availability are cited as a constraint on growth by SME – gaps from early-stage to follow-on investment.
The North East region has a greater share of private sector employment in SMEs and a smaller share in large businesses. SMEs account for 99.9% of all businesses in the North East region, 67% of all business employment and 60% of business turnover.
Business births and death rates per 10,000 adults in the North East
Data information: Based on the North East LEP area, England excluding London
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Registered businesses per 10,000 working age adults by geography
Source: UK Business Counts (ONS via Nomis) (last updated 2023, next update autumn 2024)
Data information: Annual count of enterprises registered for VAT and/or PAYE, taken in March. Enterprises are defined as the smallest combination of legal units (generally based on VAT or PAYE records) that have a certain degree of autonomy within an enterprise group.
Based on North East LEP area, England excluding London, England, LEP areas and local authority areas.
Adult population is defined as aged 16 and over.
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North East region and comparators, SME percentage of businesses, employment and turnover (% - 2022)
Data information: North East region
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proportion of innovation active businesses in the North East
R&D tax credits claims in the North East in 2019-2020
proportion of R&D expenditure from higher education in the North
The scale of innovation activity is below the national average in the North East. Expenditure on R&D tax credits is well below the national average. On a per capita basis, the North receives a smaller amount of R&D expenditure from all sources.
Manufacturing, IT and scientific and technical activities are the sectors with the largest numbers of R&D tax credits claims and expenditure in the North East region. Higher R&D nationally is driven by research intensive clusters and large firms, such as the manufacturing cluster in the West Midlands
The Universities and the four catapult centres with a presence in the North East are key assets in leveraging private sector R&D across the mayoral combined authority area.
Innovation active businesses (%), 2012-2020, North East area, England
Source: UK Innovation Survey (BEIS) [Last updated 12 May 2022]
Data information: The Survey is voluntary and samples businesses with ten or more employees.
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Total R&D tax credits claims in the Core Cities (2019/20)
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Research and development expenditure in the North by source
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Inward investment and trade
Jobs created through FDI in the last two years
automotive exports from the North East
increase in regional pharma exports since 2020
In 2021/22 the North East created more jobs through FDI than every region outside of London and more jobs than London on a per capita basis. In 2022/23 it still created more than England excluding London
This has been driven by investment in the electrification sector in particular, as well as offshore wind, digital technologies, and business services
The North East region is a strong exporter of goods, exporting a greater value relative to overall output than England exc. London. Automotive is the major contributor to regional exports accounting for almost a quarter of the total value
The growth rate of goods exporting over the past decade has been below the national average and the North East has seen a slow recovery from COVID (partly reflecting global supply chain issues in automotive sector). Regional pharma exports have seen significant growth post Covid
The North East region also exports a significant amount of services although less on a per capita basis than nationally
Total jobs created through FDI by working age resident over time
Data information: Excludes multisite projects
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Total North East goods exports over time by quarter (£millions)
North East region exports of goods in each quarter.
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Total service exports from the North East region over time
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Further data
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