Investments in connectivity will pay exporting dividends

Trade: Jack Simpson, North East England Chamber of Commerce policy adviser, on why ambitious infrastructure projects for the region are needed to ensure we make the most of the boundless international trade opportunities that are within our grasp

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Jack Simpson
jack.simpson@neechamber.co.uk
@NEEChamberJack

International trade is built on strong foundations, deep personal relationships and market knowledge, committed resources and, maybe most importantly, a developed and effective infrastructure.

If I am trying to find light in the never-ending tunnel of Brexit, it is that there has never been a greater focus on conducting and growing international trade. Debate, newspapers and even Twitter have been dominated by Customs Union, Freeports, tariffs and trade deals. Perhaps the ease of trade with the European Union made us complacent as trade innovators, but now trade policy is firmly back on the table.

As we begin to look beyond the mountainous Brexit horizon, we find ourselves in a new trading environment, and how we can best access and unlock new opportunities, whether getting business to market, attracting new investment or welcoming new tourists to explore the best region in the UK.

In the previous Contact I mentioned that only around five per cent of North East business export, despite exporting more value per exporter than any other region. Research from Maastricht University found that for every one per cent increase in infrastructure, international activity rises by 0.9 per cent (0.6 per cent export, 0.3 per cent import).

While there are many short-term answers to boost exports, opening access to markets by developing a reliable and pioneering infrastructure system is arguably the most important ingredient to develop long-term global prosperity.

In partnership with Womble Bond Dickinson, the Chamber has produced a report recommending a range of infrastructure polices and interventions to not only help unlock the regions global potential, but to better serve the economic needs of the North East, outwards and within.

To be a world leading economy, we must commit to, and improve, physical connections. Funding key road projects, such as dualling the A1, developing the passenger and freight capacity of the East Coast Mainline and progressing with HS2 will improve regional links to key points of trade, such as ports or clusters, and relieve the strain.

Not only does a developed infrastructure grease the wheels of regional economic activity, it will make the area a more desirable place to invest. Better access to a region with lower
costs (and a better way) of living and doing business should see a healthier distribution of investment in this London- centric economy.

Ports are probably the traditional trading image: shipping containers, cranes and huge ships ready for the long voyage. The North East has deep naval roots, from Northumberland’s Admiral Collingwood, Tyne & Wear shipbuilding, top ten European port in Teesport and now the UK’s first maritime hub at Port of Tyne.

But it’s time to rethink this image, some of the best innovation is happening in maritime technology. A hundred years ago wooden sail ships were still used for trade, now we’re talking about the first unmanned ship by September 2020.

The Government’s “Maritime 2050” strategy includes the creation of a maritime innovation hub, and we have recommended this is based in the North East. Already famed for our innovation, putting the region at the forefront of maritime innovation would help facilitate movement of goods and draw in new investors, innovators and industry to implement and service the new technology. But trade isn’t just about moving goods and money, its making and building relationships. Just last month, a delegation from Chennai, India, was amazed at the simplicity of visiting the North East via the Dubai flight, and believed this to be a key asset in facilitating the economic relationship between the two regions.

Looking at the success of that Emirates Dubai flight, attention is being drawn towards the United States and China. The USA-UK is one of the largest investment partnerships, worth $1.3trn, and the North East is littered with American partners and offices. As we gear up for the Atlanta-Washington 2020 trade mission, a direct link to our American partners would be pushing on an open door.

China, meanwhile, is a growing investor, with sites like TusPark attracting a delegation from Shenzhen, a city of 23 million people (and that’s only China’s fourth largest city). Securing a direct route could be timely in realising the potential of Chinese trade, as well as unlocking

onward opportunities, such as Japan and South East Asia. Ultimately, the easier we can make it for investors to reach the opportunity and form relationships, the more we can attract, and this should be central to trade policy.

It’s strange, but because foreign money is being spent, tourism is global trade. Just this year Newcastle have announced new flights to Aberdeen, Bergen and Munich, while newly named Teesside International secured Majorca. Building on some of our cultural strengths, and making it easier for tourists to move around, will increase regional economic activity while also raising our global profile.

From this report, the Chamber and Womble Bond Dickinson have committed to work with stakeholders on improving the tourism offer and making it easier for visitors to visit all parts of our great region.

Yet, since the launch of the Northern Powerhouse in 2014, infrastructure spend per head has increased twice as much in London compared to the North. This from a Government that stated closing the gap between London and the rest of the UK was “the greatest prize in Britain today” and has set an export target of 35 per cent of national GDP.

I currently look with envy at the developments of the East Asian corridor, a five year $43bn Thai project to combine air, naval and road infrastructure and act as a gateway to East Asia, and at Trump’s “trillion dollar plan” for the next ten years including support for rural connections to major hubs, even the French TGV which got me from Paris to Nancy in two hours.

If we are to be a true powerhouse, we should not shy away from developing and delivering on ambitious infrastructure projects for the region. Ok maybe not a trillion dollars, but it shouldn’t be a choice between HS2 or local routes, naval or aviation development, it should be one strategy to further fuel the region’s local and global ambitions.