On a sunny Tuesday morning, Leeds city centre is bustling, giving little indication that the economy is in the doldrums and that unemployment continues to rise. Shoppers criss-cross the pedestrianised streets visiting budget fashion outlets such as Primark and TK Maxx, while others head for the ritzy five-floor Harvey Nichols — the first branch of the Knightsbridge store outside the capital.
The unashamedly upmarket shop, where a T-shirt could cost £160, is testament to the fact that there is money in Leeds and Yorkshire. Median gross weekly earnings of its residents are higher than in almost any major city in England, apart from Manchester and London.
A century ago, tailoring, engineering and textiles employed almost half of the Leeds workforce, but the city’s prosperity is now underpinned by the financial sector. It has about 300,000 employees in the financial and business services sector — the largest number outside the capital — according to Tom Riordan, chief executive of Yorkshire Forward, the regional development agency.
Many feared that the financial sector would be hit hard by the economic downturn but, for the most part, those fears have proved unfounded.
Mr Riordan said: “Things are tough and we feel like we’re still in the eye of the storm, but we’ve got a very resilient and competitive financial services sector in Leeds that has grown very well over the past few years.
“There have been some job losses, but we’re cautiously optimistic that we’re going to come out of this with the economy intact and not deteriorate like it did in the 1980s.”
The shotgun wedding last year between Halifax Bank of Scotland, which employs 20,000 people in the region, and Lloyds, has been a key issue for Yorkshire Forward. The organisation has highlighted the low-risk, high-reward benefits of the region to the enlarged bank. He said that some of its benefits include a critical mass of well educated and skilled workers, lower costs than London or the South East, and fast regular rail connections to the capital.
Lloyds’s comments so far about retaining the Halifax brand have left Mr Riordan cautiously optimistic. “The people in Halifax are an amazing workforce. They have been through three mergers in ten years. They’re very adaptable, and loyal too. You build a brand on the workforce and Lloyds have recognised that.” However, he concedes that big job losses from the Halifax workforce remain a threat in the medium term.
There is a feeling among businesses in Yorkshire that the decline is hitting the bottom and the hope is that growth will make a comeback in the first quarter of next year, Mr Riordan said.
Despite the downturn, Yorkshire and Humber has had a record number of foreign investors in the past 12 months, with 125 organisations bringing more than £660 million to the region. More than half the inward investment has come from international companies that already have a presence, said Theresa Lindsay, assistant director of business for Yorkshire Forward. One of the biggest investments has been the expansion of its Leeds dairy by Arla Foods, creating about 100 jobs.
The picture is not quite as rosy in every sector of the region’s economy, however. Thousands of flats have been built in the centre of Leeds in recent years, many bought by buyto-let investors who have seen the values plummet and rental demand shrink. The construction industry that rode the house price wave has been hit hard, Mr Riordan said, and its main hope for the immediate future depends on local government attracting funding for regeneration projects.
Despite its reputation as a financial hub, Leeds is the service centre of the third-largest manufacturing area in the UK, with particular strengths in steel, medical devices and green technology. Mr Riordan said: “The lesson that everybody has learnt over the past year is that you’ve got to have a strong manufacturing base supporting the services sector — you cannot just have one or the other and it’s really important that we support manufacturers.”
Moores Furniture Group, based in Wetherby, West Yorkshire, has fared better than others. The supplier and installer of kitchens, bathrooms and windows saw the storm on the horizon in 2007 and offered voluntary redundancy or early retirement to cut its workforce of 1,000 by 20 per cent. However, Moores, part of America’s Masco, has also been investing, snapping up some of the assets of Bernstein Group, the kitchen company based in Bolton, whose brands include Four Seasons. Peter Wilson, the chief executive of Moores, is confident that the company will be well placed when the housing market recovers: “There will be an upturn — it’s just a matter of when.”
Although the recession has claimed a number of famous names on the high street, it has been less damaging for supermarkets, particularly those at the value end of the groceries market. They include Morrisons, based in Bradford, and Asda, whose head office is just around the corner from Leeds station.
Paul Kelly, corporate affairs director, said that Asda’s roots are still strongly in Leeds. Apart from the 1,500 staff in head office, Asda has 18,600 workers in Yorkshire and Humber, about 2 per cent of its workforce.
The retailer spends about £2.2 billion — 16 per cent of its national total — procuring goods in the region, which he said supports a further 23,000 jobs. “At a time when the region has had a few setbacks — Halifax, Bradford & Bingley, Northern Rock — we remain a big business that is doing well,” he said.
In the ten years since Asda was acquired by Wal-Mart for £6.7 billion, Mr Kelly believes that little has changed. Large clocks in the foyer might display the time in Bentonville, Arkansas, where Wal-Mart is based, as well as Leeds, but the parent company adopts a “fairly light touch”.
“Wal-Mart has given us the ability to compete; we’re still only half the size of Tesco, but if you look at our market share it was about 12 per cent [before the takeover] and now it’s 17 per cent,” Mr Kelly said.
The recession has meant that supermarkets are now “earning the loyalty of their customers week in, week out” as shoppers compare advertised offers and websites to decide where to shop. As Asda’s like-for-like sales in the first quarter were up 8.6 per cent, there is some evidence to suggest that its down-to-earth approach — including featuring real staff members in its television ads — is working.
Northern Foods, another Leeds-based company, has also fared well in the downturn. The company makes Fox’s biscuits and ready meals for Marks & Spencer. It says that though consumers may be curtailing discretionary spending, they are rewarding themselves with affordable treats such as its Goodfella’s frozen pizzas and Fox’s biscuits, revenue for which was up 6.8 per cent. Sales for the year to the end of March were up 4.6 per cent, with pre-tax profits only slightly down at £47.5 million.
The company is also seeking to cut costs through action such as streamlining its biscuit manufacturing operations at one site instead of running three factories scattered around the country.
Although the unemployment rate has risen by 40,000 in the past year and now stands at about 8 per cent, 200,000 more people have jobs than in the early 1990s, Mr Riordan said. “We’ve got a much more mixed economy now and that’s what is standing us in good stead.
“It’s tough and we have lost jobs and we’ll lose more jobs, but it’s not on the same scale that we had previously. We are relieved that we’re withstanding the storm.”
The growth in the number of people taking holidays in Britain during the recession has also proved an unexpected boon, with a new tourism campaign helping to boost the number of visitors to the region by 30 per cent.
“Once you come here, it’s very hard to leave, as you get the best of both worlds,” Mr Riordan said. “There is a very buzzy city with great nightlife, great shopping and a lot of big businesses, affordable housing relative to the South East, and good rail links to London. But at the same time, on your doorstep there is beautiful countryside with three national parks . . . and the Emmerdale set is within the Leeds city boundary.”
While some may still associate Leeds and Yorkshire with economic decline, he points out that the region’s economy is the same size as that of Scotland or Denmark and has grown faster than Europe for seven of the past eight years. “There’s a confidence now in this part of the world — maybe we’ve got our pride back a bit in terms of the economy.”
