REASONS TO BE CHEERFUL

Judging from the headlines, the new year has hardly started in a mood of economic optimism, writes Guy Gowing.  With the full impact of Rachel Reeves’ tax rises still to be felt by businesses, it is easy to be gloomy, but it is important to look at the wider picture – and this gives us more grounds for optimism.

Without downplaying the very real challenges facing the economy, downward trends in both inflation and interest rates – albeit at a slower than hoped-for pace – will eventually boost confidence.  Despite the best efforts of both this and the previous government, the underlying economy is in fact performing well.

There are, as ever, potential storm clouds on the horizon, in the form of global events over which we have no control.  We don’t yet know the impact of a second Trump presidency; we must hope that the reality is once again less disruptive than the rhetoric. 

We should focus on those things we can change.  To unlock further growth in the East Anglian economy needs various hurdles to be dismantled, including a solution to the long-running Nutrient Neutrality issue, and a wholesale reform of business rates - this is a particularly urgent issue for our retail and hospitality businesses.

Nevertheless, there is plenty to be positive about.  Major infrastructure projects such as the A47 improvements, the Long Stratton bypass on the A140, and third river crossings at both Great Yarmouth and Lowestoft are either underway, well-advanced, or completed.  Our region has largely transitioned into a knowledge economy, with strong skillsets in areas such as technology and the creative industries.

Local challenges include the restricted supply of new commercial premises (both industrial and grade A offices), and delays in buildings the new homes we need to accommodate the workers who will drive growth.

In the commercial property market, the underlying strength of the local economy is demonstrated by very strong demand for warehousing and industrial units, resulting in an upwards pressure on rents and strong returns for investors.  And the growing trend for ‘return to office’ is helping landlords who are prepared to invest in their premises to meet buoyant demand.

The picture in retail is more nuanced: we are undoubtedly feeling the effects of competition from online retail (one area where the business rates imbalance is particularly damaging), but as Norwich’s resilience indicates, having a diverse retail offer, including a strong independent, niche sector, can preserve a thriving High Street.

Despite the challenges, Norfolk is still a great place to do business, and confidence remains generally high.  We all need to be more proactive in telling the positive stories, and talking up our county and the opportunities it affords.