Page last updated at 09:57 GMT, Friday, 24 October 2008 10:57 UK

East business confidence slumps

By Richard Bond
Business correspondent, BBC Look East

Port businesses say all they can do is go out and win new customers

BBC Look East business correspondent Richard Bond examines how the economic downturn is affecting the region.

Batten down the hatches. That seems to be the message for companies in the East of England right now.

Confidence among the 430,000 businesses that make up the region's economy has been ebbing all year, but in the past month it has dropped off markedly.

The cause is pretty clear - the banking crisis. Not just all the headlines but the impact the banks have had on individual firms, by way of higher interest rates and a more cautious attitude to lending.

Six months ago it would have been easy to reel off a list of sectors still doing well. These days it is hard to mention one or two.

Companies which held off cutting jobs for a while, hoping for the return of better times, have started to issue redundancy notices.

There was an ominous rise of 10,000 in unemployment in the third quarter of this year, taking the region's total to 142,000.

The construction sector is at the heart of the storm. Major regional contractors such as RG Carter are shedding not just contract labour but core staff.

Hundreds of smaller firms down the building chain are cutting two or three jobs apiece.

Easyjet generic

Financial services, another big prop of the region's economy, are looking shaky.

The biggest hit so far has been among commuters whose jobs are disappearing in the City. The financial services industry on our doorstep is holding up surprisingly well - so far. Aviva, Britain's biggest insurer, is even taking on 300 extra staff at its Norwich call centre.

Stansted Airport, for so long the engine of the region's economic growth, has been spluttering all year.

Passenger numbers have been put into reverse by the collapse of two transatlantic airlines, Eos and Maxjet, and cutbacks at Easyjet and Ryanair, who are grounding aircraft.

But we must not get too gloomy. As Richard Tunnicliffe, regional director of the CBI, points out, the East of England economy is more diversified than most, with no overwhelming dependence on one sector.

And the strong science base around Cambridge and Norwich gives us an edge which other regions would kill for.

We have huge strengths in recession-proof industries, from food processing to professional services. So it may be that the recession here will be less severe than in other regions.


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