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Long-term effects of the economic downturn

PUBLISHED: 22:49 06 September 2009 | UPDATED: 11:57 06 July 2010

Around 167,000 people will have been out of work as a result of the recession before it finally ends - in around five years time.

Around 167,000 people will have been out of work as a result of the recession before it finally ends - in around five years time.

That was the conclusion from a new study out today which looks at the economic outlook for the East of England.

The Insight East study said that currently 194,000 people are unemployed - up 59,000 from the same period in the second quarter of last year, and rising.

And it predicts that 167,000 job losses will have been a direct result of the downturn.

But the report, the first comprehensive study on the impact of the recession in the region, states the regional economy will start to pick up in 2011, though it will take until 2015 before the jobs lost in the recession are reversed.

It said all sectors apart from manufacturing will bounce back once the economy picks up again with 30,000 new jobs in high skilled sectors such as IT, research and development, as well as call centres, property and the service sector.

And despite the economy contracting in line with the rest of the UK, from 2011, the region will overtake the rest of country, with economic growth peaking in 2013.

The report said that manufacturing and construction firms had been worst hit as well as transport and logistics.

Growth is likely to contract by 4.9pc this year with a slow recovery from next year.

From then it will match the 0.3pc UK average growth rate but then pull ahead of the rest of the country peaking at 3.9pc

Glenn Athey, director of Insight East, which is funded by the East of England Development Agency, said: “There is no doubt that the impact of the recession has been severe and recovery will be sluggish from 2010 with unemployment continuing to rise in the short-term.

“The good news is that, based on our understanding of recent trends, the region may well regain those jobs lost by 2015 and that there will be more jobs than before the recession started in areas that the region is traditionally strong including R&D and information technology, which are sectors that will power the economy of the future.

Caroline Williams, chief executive of Norfolk Chamber of Commerce said firms were currently finding conditions tough and planning for a “long haul” out of the recession.

“The situation is variable with exporters still reasonably buoyant but again they are being cautious before recruiting additional staff. The technology sector reports an upturn in sales recently but even within the same sector the messages are mixed dependant on the individual customers they are dealing with.

“Business is cautiously optimistic but confidence in the future is still lacking. We need Government to listen to the needs of businesses as it is business which will drive Norfolk's economy forward.”

Chris Starkie, chief executive of economic development partnership Shaping Norfolk's Future, said: "The economic forecast shows just how deep the recession has been and how long it will take to fully recover.

“It is fair to say that Norfolk's economy has not been as badly hit by the recession as other parts of the region, but significant challenges remain, not least the huge increase in unemployment.

“The focus must now be on ensuring Norfolk is well placed to take advantage of opportunities as the recovery begins which is why we are working to stimulate sectors with growth potential such as health and life sciences, ICT, and professional and business services.”

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