Economy

Hertfordshire growth slows with UK

The UK's strong economic growth in recent years began to slow in 2004. Beginning in the middle of 2004, the decline in the rate of growth occurred amidst rising oil prices and a slowing down of the housing market and the depressing effect on exports of the weak economies of our major European trading partners. As a result the UK economy grew by only 1.9% in 2005 and Hertfordshire experienced similarly poor growth.

Indicator EC1 - Percentage rise in GVA

Gross Value Added (GVA) is a key indicator of the state of the economy and is broadly the same as Gross Domestic Product (GDP). GVA is the difference between the value of goods and services produced and the cost of raw materials and other inputs used in production.

2005 was an exceptionally bad year for UK growth, the worst since 1992, and this was reflected in the county's lack of growth. Hertfordshire's GVA rose by only 1.3% in 2005, quite a deterioration when this is compared with the 3.6% reported last year. As the county tends to outperform the UK economy in good years and underperform it in bad years, it is not surprising that growth was beneath the UK's rate of 1.9% and the East of England's rate of 1.7%. (Source: ONS and Experian Business Strategies).

Indicator EC2 - Employment in knowledge-based industries and services

photo of a scientist experimenting

At the time of print, the most current data for this indicator was published in the 2005 Report.

Knowledge-based industries and services include 'finance, insurance, real estate and business services; education; health and social work; other community and personal services; post and telecommunications; high and medium-high tech industries: chemicals; machinery and equipment; transport, excluding building ships and boats'. The Organisation for Economic Co-operation and Development¹ makes this definition which is used in the Department of Trade and Industry's² UK Competitiveness Indicators. For the purposes of regional comparisons the EU uses a narrower group of activities (essentially excluding services not considered high tech i.e. finance, insurance, real estate and business services; education; health and social work; other community and personal services). This is broken down into medium and high tech manufacturing and high tech services. There was an overall increase in employment in medium and high tech manufacturing and high tech services combined.

The EU Innovation Scoreboard 2003 (for 2002), when compared with the Annual Business Inquiry for that year, can be used to compare Hertfordshire with regions within the EU. Hertfordshire had a greater proportion of employment in medium/high tech manufacturing together with high tech services than any of the UK regions except for the South East and the West Midlands. Hertfordshire had a higher proportion of employment in high tech services than most EU regions (only Helsinki, Stockholm and Paris areas had higher rates).

Indicator EC3 - Mean annual earnings³

The mean annual earnings of Hertfordshire resident employees were £32,014 in 2006. As in 2005 these were the highest in the East of England and lower than those in London and Surrey.

Source: ASHE 2006 Table 8.7a 27 October 2006
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Indicator EC4 - The percentage increase or decrease in the total number of VAT registered businesses

This indicator is used to gauge the level of entrepreneurial activity in the county. During 2005 the number of VAT-registered businesses for each Hertfordshire district and the county as a whole showed a positive increase in percentage change. The previous year now seems to have been an exceptional year when nearly all districts experienced decreases in the number businesses that were VAT registered.

Chart 1 - Comparison of 2004 and 2005

Source: Regeneration & Partnerships Unit, Hertfordshire County Council November 2006 ONS Crown Copyright Reserved [from Nomis on 25 October 2006]
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Since de-registrations are seen as an inevitable but healthy economic occurrence, new registrations as a percentage of the previously existing VAT registered businesses may be a more revealing way of measuring the county's economic health. This is shown in the second graph for this indicator where the number of new VAT-registrations in 2005 as a percentage of the number of registered businesses at the end of 2004 was monitored for each district/ borough in Hertfordshire and the county as a whole.

Chart 2 - New VAT registrations as percentage of existing stock

As in 2004, most of Hertfordshire's districts had new VAT registrations equalling around 10% of their existing registrations stock. The exception was Watford which led the county in new registrations in 2004 and in 2005 had a rate of nearly 15%. Overall the rate of new registrations increased only slightly in 2005. This highlights the fact that net increases shown in the first graph are largely due to a fall-off in the high rate of de-registration in 2004.

Hertfordshire Employment Development

In the county, between 1 April 2005 and 31 March 2006, employment development was completed, or construction commenced on several sites that will offer opportunities, both for economic growth and the regeneration of existing Employment Areas. Some sites notable of interest are in the following Districts:

Hertsmere

In Bushey the redevelopment of 6 units in Otterspool Way into a 20,000 square metre showroom and warehouse for Porcelanosa was completed.

Stevenage

Major redevelopment of the British Aerospace site in the Gunnels Wood Road Employment Area continued with the commencement of the redevelopment of the southern part of the site with a mix of uses proposed.

Also in Gunnels Wood Road the former ABB site was replaced by a mixture of industrial and warehouse units, a builders merchant and a 10,000 square metre vegetable packing and distribution building.

Welwyn Hatfield

In Welwyn Garden City, another phase in the development of Shire Park was completed when pharmaceutical company Roche relocated their offices from existing sites in Welwyn Garden City. On Mundells, the site previously occupied by Textron, has been redeveloped with 11,900 square metres for Hertfordshire Business Services, a further 30,000 square metres has detailed planning permission of which 11,500 square metres was under construction for a number of industrial/warehouse units.

Broxbourne

The period saw progress on the Key Employment Site at Waltham Cross, where work started on a new high tech print works for News International. When complete, the development will create in total 116,000 square metres of new floorspace, and includes a hotel, office/ commercial building.

Source: HCC Development Monitoring System, Environment Dept, Hertfordshire County Council

1 See website: www.oecd.org
2 See website: www.dti.gov.uk
3 The 'Annual Survey of Hours and Earnings' has replaced the previous 'income per household' data which is no longer purchased by Hertfordshire County Council.