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Private sector 'ready to take up the slack' Mersey firms are ready for challenge.

Byline: Tony McDonough

A LEADING Merseyside economist says the Liverpool city region needs to "hold its breath" ahead of details of pounds 6bn of public spending cuts due to be announced on Monday.

The region could be one of the worst-affected parts of the country when the Conservative-Liberal Democrat coalition spells out where pounds 6bn of cuts will fall next week.

Peter Stoney, an expert with the Liverpool Research Group in Macro-economics (LRGM), points out that the proportion of Merseyside workers employed in the public sector is 10% higher than the UK average.

This could mean any cuts could have a disproportionate effect on the Liverpool city region.

"I think Merseyside has got to be holding its breath ahead of this announcement," said Mr Stoney. LRGM's latest report acknowledges the problem, but also points out that the region's private sector is now much better placed to fill the gap left by any public sector cuts.

It states: "The principal source of resilience stems from the prospective performance of one of its biggest natural assets - its port.

"While trading volumes will have been hit by the global recession, the new management at the Port of Liverpool is in the process of planning and implementing projects on both sides of the River Mersey that should ensure socio-economic benefits for Merseyside."

Mr Stoney added: "I am optimistic about the private sector in Merseyside. You only have to look at how well Jaguar Land Rover is now doing in terms of sales. The prospect of a car factory closure here seems to have gone away for now."

There are fears for major infrastructure projects like the rebuilding of the Royal Liverpool Hospital and the Mersey Gateway bridge scheme. However, Jack Stopforth, chief executive of Liverpool Chamber of Commerce, also has faith in the strength of the public sector and adds any cuts may even provide new opportunities.

He said: "I agree with Peter about how much better equipped our private sector is now.

"We needed the support of the Objective 1 money to address the structural weaknesses that existed in our economy.

"I think that has done an extraordinarily good job, and has left us well-placed to compete. "If the cuts mean more work actually goes out to the private sector, then I think we can rise to the challenge." The Government is to hold an emergency Budget on June 22, but Chancellor George Osborne wants to waste little time in demonstrating his intention to tackle the UK's record pounds 163bn deficit.

Ministers have been ordered to review every new spending decision made by Labour this year in a bid to identify ways to slash more from the Whitehall bill. Mr Osborne said the cutbacks are backed by the Bank of England and the Treasury and failing to act quickly would be "disastrous" for the economy. The LRGM report also points out that there is now much more co-operation between the public and private sectors than there was 30 years ago.

It adds: "There is now a noticeable culture change in the public sector, in that it is more proactive in helping the private sector to prosper. The Mersey Partnership is a good example of this phenomenon and there are plenty of others, too, such as Liverpool Vision and Liverpool Commercial District Partnership." BILL GLEESON: P8 UK recovery gathers momentum: P8-9


Peter Stoney
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Title Annotation:Business
Publication:Daily Post (Liverpool, England)
Date:May 19, 2010
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