Weekly News 13th to 18th June 2011

Local economy

Northern Rock has been put up for sale.  Contenders for the business include Virgin Money, the Coventry and Yorkshire building societies, investment groups NBNK and Olivant, and Tesco Bank.  (J & FT 16/06)
The Northern Rock Foundation faces an uncertain future after the Chancellor turned down pleas to ensure support for the charity is a part of the bank sale requirements.  (J 17/06)

The NE has the highest concentration of care homes run by Southern Cross – Care Quality Commission.  With 106 homes in the NE [49 in T&W], the region would be the hardest hit region if Southern Cross collapses.  (J 13/06)

Administrators have been called in to look for buyers for a portfolio of 42 Marriott-branded hotels in the UK.  [This includes the Gosforth Park site in Newcastle and the Metrocentre site in Gateshead.]  (J 16/06)

Siemens will increase the intake of trainee wind technicians at its Newcastle training facility to 1,000.  It opened the UK’s first dedicated wind power training school in the city in 2009 and has trained over 500 technicians. It announced a new integrated division based in Newcastle, Siemens Energy Service UK, which  brings together the Service Renewables business and the Energy Service division. (J 13/06)

Housebuilder Linden Homes launched a new division, Linden Homes North East, after picking up lucrative housing contracts, including its involvement in the regeneration of Gateshead’s housing stock.  It will be based at the Galliford Try Partnership’s North office in Ponteland, Newcastle.  (J 17/06)

Tyneside builder Hastie Burton has been brought out of liquidation by Newcastle-based property and construction firm, Adderstone.  (J 17/06)

Holiday company Hays Travel is looking for more acquisitions after the Sunderland business drove up its revenues by 20% to £470m.  (J 16/06)

NE economy

North East business growth slowed in May despite a solid rise in new orders – Lloyds TSB NE PMI.  However, the growth rate is still above the UK average and output prices continue to be robust.  (J 13/06)

Unemployment in the NE fell slightly because of a boost in retail and holiday businesses. The jobless total fell by 8,000 to 9.5% in May, the lowest for nearly a year - latest quarterly report on Britain’s employment prospects.  The number of people claiming Jobseekers Allowance in the NE rose by nearly 1,000.  (J 16/06)

Employers in the NE are among the most positive about the employment outlook – Manpower.  The UK’s employment outlook is the most positive it has been for three years, with small firms driving job creation.(J 15/06)
Business leaders warned the NE needs to triple the number of homes built each year or face a housing crisis.  In 2010, only 4,600 new homes were built, down from more than 8,000 a year before the recession.  The region would need at least 55,000 new homes by 2027 just to keep up with growing demands – NECC.  (J 14/06)

Job gains

Siemens in Hebburn, South Tyneside will build components for the 1,200 carriages on the Thameslink commuter route in the SE of England.  Siemens says 2,000 jobs will be created, with up to 300 highly-skilled roles at the Hebburn plant.  (J 17/06)

Newcastle-based estate agent, Keith Pattinson Ltd, increased its employees from 181 to 208 last year to cope with growing demand in the rental sector as well as for its auction sales.  (J 18/06)

Job gains North East

Newcastle-based recruitment firm, Temp-team increased its staff from 40 to 50 after doubling turnover. It moved from Redcar to a larger unit at Stockton’s Preston Farm Business Centre.  (J 14/06)

Potential job gains NE

Developer Wynyard Park has drawn up multi-million pound plans to develop the South West Ironmasters site in Middlesbrough as an Advanced Manufacturing Park.  It would focus on the future energy sector and could play host to up to 1,000 jobs, eventually being worth up to £46m a year to the local economy.  (J 17/06)

National economy

Labour market recovery remains fragile, despite a fall in unemployment of 88,000 to 2.43m in Q1, the biggest drop for more than a decade.  Private sector job creation (104,000) outstripped job losses in the public sector over the quarter (down 24,000).  Overall employment grew by 80,000 on the quarter and by 376,000 [over 1.2%] on the year.  (FT 16/06 & ONS)

The UK’s labour market has deep-seated structural problems that will not be solved by a return to economic growth alone – CBI employers’ group.  Although unemployment has risen by far less than in past recessions, the CBI argues that the previous decade of growth masked entrenched difficulties, including pockets of long- term unemployment and inactivity, high public sector dependency and serious skill shortages.  These labour market divisions will deepen as the recovery continues, with highly skilled workers expected to be most in demand in London and SE England and least in the NE and West Midlands.  (FT 13/06)

Almost a quarter of high streets in the UK are failing, as a gap grows between the best and worst town centres – property consultants, Colliers International.  (J 18/06)

Sales in supermarkets in May fell at the fastest rate since records began.  Sales values at stores that predominantly sell food dropped by 3.2%, more than reversing a 3% rise seen in April.  (FT 17/06)

Small firms are being put off from recruiting extra staff because of uncertainty about contracts and the cost of credit – FSB.  (J 13/06)
Government efforts to kick-start bank lending to SMEs has had a limited impact on deal activity in the first-half of the year – NE firm, RMT corporate Finance.  The report found that the Governmental and banking initiative Project Merlin had so far had minimal impact on deals among small firms; the number of deals valued at between £500,000 and £5m in Q1 2011 was 210, compared with 232 in the same period last year.  (J 15/06)

Britain’s big banks are on schedule to beat lending targets set in the Project Merlin accord.  The ‘stretch targets’ are about 10% below the official ‘capacity targets’.  They put the banks on course to beat the overall corporate lending goal by 13% and to all but hit the figure for lending to SMEs.  The Merlin “quarterly ‘stretch’ target” for SME credit in the three months to March was £17.2bn, barely higher than the £16.8bn in fact achieved.  (FT 13/06)

Britain’s banks appear to be in far better shape than even they had imagined and are paying back their government supported loans at a very rapid rate – BoE quarterly bulletin.  UK banks have paid back all but £37bn of the £185bn they borrowed, using their mortgage-backed securities as collateral, as liquidity dried up in the second-half of 2007 and 2008.  (FT 13/06)


Newcastle City Council and Gateshead Council are working together to bring forward the Newcastle Gateshead One Core Strategy 2030 which will be focused on seven defined areas.  The Area Action Plans and Core Strategy will set out the overall vision and strategy for key areas within and around the respective city and town centres, including the Discovery Quarter and the Stephenson Quarter.  The overall Stephenson scheme, which will begin later this year, will involve 220,000sq ft of offices, 150,000sq ft of residential apartments, a large 250-bedroom hotel and leisure/conference centre and multi-storey car park.  (J 15/06)

Pacific Bar on Northumberland Road in Newcastle, will reopen as Pacific House after refurbishment works to create more than 4,000sq ft of grade A office space.  The offices, to be known as Pacific Point, has already secured a high profile occupier for the larger, 1,800sq ft office, with the 1,200sq ft property still available.  (J 15/06)


Almost half of schools in England are not giving pupils a good enough education – Ofsted.  39% of schools inspected in the autumn and spring terms of 2010/11 were only found to be satisfactory, while 6% were ‘inadequate’.  Just 10% were outstanding.  (J 16/06)

The employment rate among Newcastle University graduates from summer 2010 has risen to over 94%, up 2.7% on the previous year – Destination of Leavers from Higher Education (DLHE), HESA.  The jobs they get are overwhelmingly graduate level, at 77.7%. (J 17/06)

Eurozone economy

Concerns are rising that a restructuring [default] of Greece’s debt could have a disastrous knock-on effect on the European financial system.  European banks’ exposure to Greece unnerved investors again as Moody’s said it might cut the credit ratings of France’s three largest banks because of their large holdings in Greek debt.  (FT 16/06)
Fears of contagion from political and market turmoil in Greece sent Spanish borrowing costs to 11-year highs.  (FT 17/06)
Germany backed down from its confrontation with the ECB over bond holders’ participation in a new Greek rescue plan, [instead] throwing its weight behind a voluntary roll over of Greek debt rather than a full-scale debt exchange with extended maturities.  (FT 18/06)

Late news

Eurozone finance ministers have postponed their decision on a €12bn ($17bn; £10bn) loan to Greece until it introduces further austerity measures.  (BBC News 20/06)

Europe’s rescue fund [the EFSF] is expected to attract billions of euros of orders from investors for its latest bailout bond offering.  Despite concern over the possible terms of a second international rescue of Greece and rising borrowing costs for ‘peripheral’ eurozone nations, investment funds and central banks in Europe and Asia, and even possibly a handful of US funds, are set to put in offers for the bonds.  (FT 14/06)

Global regulators are poised to set a new tiered regime of additional capital requirements for about 30 of the world’s biggest banks.  At least 8 banks are being targeted for capital surcharges of 2.5% of their assets, adjusted for risk, on top of the ‘Basel III’ minimum of 7% set by global regulators last year.  If the ideas are adopted, Citigroup, JPMorgan, Bank of America, Deutsche Bank, HSBC, BNP Paribas, Royal Bank of Scotland and Barclays would have to maintain core tier one capital ratios of 9.5%.  Regulators plan to place each institution into a ‘bucket’ carrying a particular surcharge based on bank size, global reach, structural complexity and whether other banks could absorb its business.  Banks could move between categories as their size, structure and risk appetite change.  (FT 17/06)