Historically the business stock per head in the North East has been low relative to the national average. This has contributed to poor GVA statistics and an increased reliance on public sector employment. The region’s corporate stock per head is just 58% of the national average, it is estimated that another 32,000 businesses would be required to reach the national average for GVA per head.

The gap between the regional and national averages continues to increase, between 1995 and 2004 the North East increased its business stock by just 0.3% per annum, compared to a national rate of 0.7%pa.

Following a sustained period of decline in the region’s business stock throughout the 1990s, it appears that the base has stabilised, 12 month and 36 month survival rates for businesses in the North East are now similar to the national average. It is important to build on this base and begin to replace the companies lost, however the region has struggled to do this perhaps dues to its under representation in the sectors which have stimulated growth nationally.

The North East still relies heavily on the public and manufacturing sectors for both employment and GVA. It has also struggled to increase its stock in the increasingly important business services sector; nationally this is the fastest growing sector and now accounts for 35% of UK GVA and 25% of jobs, in the North East the sector accounts for just 25% and just 19% of GVA and employment respectively.

40% of North East businesses identified a lack of visible business support as the main difficulty in running a company in the region; this was compared with a national rate of around 27%.

Fact File

•  The national average is 380 VAT registered businesses per 10,000 inhabitants.
•  The regional average is 220 businesses per 10,000 inhabitants, this is the lowest in the UK, only 72% of the second lowest region which is Scotland (305 per 10,000).
•  The UK has a ‘churn’ rate of 10.6% i.e. around 10.6% of registered businesses will deregister and be replaced by a similar number of new registrations. The NE has a ‘churn’ rate of 10.4%, in 2003, there were 4,010 de-registrations and 4,640 registrations in the region.
•  In GVA terms the manufacturing sector accounts 16% of total GVA, public services account for just over 17% and the business service sector accounts for 35%.
•  In the UK, the proportion of total jobs per sector figures show a similar trend, manufacturing accounts for just 12.6%, the public sector employs around 26% and business services make up 25%.
•  12 month survival rates are around 91%, 36 month survival rates are 66.5%, the rates for the North East are around 91%, 36 month survival rates are 65.5%.
•  According to the UK Regional Competitiveness Index, the NE is the least competitive region in the UK, 9 of the least competitive UK localities are in the region.
•  The make up of the business base in the NE is vastly different from the national picture, manufacturing represents 21% of GVA, the public sector makes up 23% and business services account for just 25%.
•  This is also the case when looking at proportion of total jobs provided by each sector, manufacturing = 14.5%, public sector 31% and business services = 19%.