UK Economy and implications for local businesses

Matteo Carrozza

Economics Team, Nationwide

UK growth strongest among developed economies

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Although from a low base…

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Reasons for recent outperformance

• Labour market stronger than expected• External outlook more supportive, especially in the Eurozone• Consumer spending driving the recovery. Why?

– Stronger labour market– Recovery of housing market

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Unemployment declining rapidly

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House price increases boosting consumer confidence, but may lead Bank of England to intervene (macroprudential regulations)

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Implications for local economy

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Outlook is improving

•Demand improving – both in the UK and abroad - with Swindon likely to capitalise on its strengths

– Diversified economy, with mixture of large manufacturing (Honda, BMW, Intel) and services companies (Nationwide, Zurich), plus strong SMEs sector. Surrounding areas also have retained some world leading companies (Dyson in Malmsbury)

– Local economy benefits from good transport links (M4 corridor, railway line), and cheaper business costs (wages and office rents) than London and the South East

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Granular look at Swindon

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• 58% of local businesses have seen higher turnover in 2013 and 69% expect higher turnover in 2014

• 89% are confident about economic prospects for 2014• 58% will be investing in 2014(Source: Business Barometer Wiltshire)

• In Swindon there are a variety of projects underway which should benefit the local economy. BMW has invested £750m in UK including Swindon (Mini), Honda has developed a new car that will be developed and manufactured entirely in Swindon. The redevelopment of old college site points to confidence in local demand

• Although Swindon does not have a university, Swindon College graded outstanding!