North East Regional Economic Model( NEEM) Overview and Training Session

1. North East Regional Economic Model( NEEM)Overview and Training Session 3. Structure of the model, economic flows and linkages 24 June 2008 North East Economic Model. Overview and training session

2. Rest of UK Sub-regional breakdowns Trade Rest of World (inc. breakdowns) North East industrial sectors - production and sales Industrial clusters Government (local and central) Households (regional population) Capital investment Qualifications Occupations Schematic diagram • This is a basic way of thinking about the model. • A more formal schematic based upon economic theory provides a more fruitful way of conceptualizing the model • ‘Circular flow of income’ 24 June 2008 North East Economic Model. Overview and training session

3. WAGES AND OTHER FACTOR INCOMES LABOUR AND OTHER FACTOR SERVICES GOODS & SERVICES SPENDING ON GOODS AND SERVICES The circular flow of income NORTH EAST FIRMS NORTH EAST HOUSEHOLDS 24 June 2008 North East Economic Model. Overview and training session

4. WAGES AND OTHER FACTOR INCOMES TAXATION SAVINGS LABOUR AND OTHER FACTOR SERVICES GOODS & SERVICES SPENDING ON GOODS AND SERVICES Expanded circular flow IMPORTS Rest UK and Oseas NORTH EAST FIRMS NORTH EAST HOUSEHOLDS These monetary flows can be clearly seen in the rows and columns on the next overhead INVESTMENT GOVERNMENT SPENDING EXPORTS Rest UK and Oseas

5. 2003 North East Regional Input-Output Table Intermediate Purchase Sectors Final Demand Sectors Private services Local & central service exports Public services Exports to the Manufacturing goods exports Total product rest of the UK EU 15 goods intermediate Construction Households government expenditure Distribution Non-EU 15 Secondary Overseas demand demand Primary Utilities Capital exports Total £ million Primary 53 354 7 0 38 - 1 2 2 3 2 66 - 217 14 1 2 Secondary 29 534 0 2 8 12 6 0 1 0 2 0 - 281 129 92 1 Manufacturing 1,450 17,401 8 9 781 12 137 91 224 188 146 458 - 8,929 3,934 2,345 139 Utilities 973 2,499 4 14 257 538 7 24 60 70 0 344 - 1,178 - - 3 Construction 1,765 5,607 3 10 51 27 1,022 25 429 198 1,735 114 - 1,987 - - 5 Distribution 912 6,553 10 7 505 9 44 47 180 109 48 3,271 - 896 823 571 32 Private services 7,270 24,524 23 80 1,560 106 379 913 3182 1,028 250 5,380 488 9,885 8 36 1,208 Public services 590 12,560 3 1 79 7 9 12 189 290 24 825 9,940 1,106 - - 77 Total NE purchases 57 123 3,278 711 1,605 1,114 4,268 1,886 13,043 2,207 10,458 10,428 24,480 4,907 3,045 1,465 Overseas imports 16 50 3,733 158 267 66 1,093 913 UK regional imports 120 165 6,000 814 1,145 1,165 4,559 2,024 Net expenditure taxes 10 16 385 76 162 132 722 252 GVA 174 210 5,415 925 2,374 3,675 12,544 7,629 Inc. compensation of employment 78 161 4638 247 1360 2109 6347 6858 Total industry output 377 564 18,811 2,684 5,553 6,153 23,186 12,704 70,033 Notes: The Government sector also includes NPISH Capital expenditure includes changes in valuables, etc Overseas tourist spending is included in overseas service exports, tourists from the rest of the UK are included in exports to the UK Values in the lower right hand quadrant of the table have been omitted for simplicity Some of these figures are approximate and should not be quoted, accurate figures can be obtained from the Durham University/OneNE regional economic model -' represents a null value, '0' represents a value of less than 0.5

6. Benefits of input-output tables • The annual I-O Tables display the transactions of all goods and services in the NE economy for a single year in matrix form. • This adds an important extra dimension to the way economic accounts are compiled and presented. • Other national & regional accounts statistics are concerned with the composition and value of goods and services entering final demand (for example, purchases by consumers), and with the outputs and incomes generated by the economic process. • They do not display the inter-industry transactions which link these activities. 24 June 2008 North East Economic Model. Overview and training session

7. Benefits of input-output tables • The production of Annual I-O Tables allows a close examination of the consistency of the • regional accounts by linking the components of industries’ gross value added, inputs and outputs • components of final demand within a single framework. Reconciliation of components of the production, income and expenditure measures of Gross Domestic Product (GDP) are reconciled during the production of these tables. 24 June 2008 North East Economic Model. Overview and training session

8. Structural features • 110 Industries and product groups • For each industry data is available on • Output and GVA • Capital expenditure • Worker headcounts • FTE workers • FTE workers by industry can be disaggregated into • 7 Qualification groupings • 22 Occupation groupings • Business size 24 June 2008 North East Economic Model. Overview and training session

9. Structural features • For each industry data is available on • Goods exports by 14 EU countries, 7 other overseas areas, and other UK regions • Service exports, overseas and other UK regions • Imports from overseas and other UK regions • Income and spending for 11 household groups (SOC classification plus unemployed and retired) • Spending patterns of domestic and overseas tourists • Spending patterns of local and national government 24 June 2008 North East Economic Model. Overview and training session

10. Core data Intermediate Production Final Demands • The model is contained within a series of interconnected matrices. • The core is an Input-Output matrix. • This core matrix maps to additional matrices for • Qualifications • Occupations • Business sites Total Inputs Households Exogenous Household Incomes Leakages Total Outputs 24 June 2008 North East Economic Model. Overview and training session

11. Each of these tables is a large matrix containing various pieces of information. The ‘NE Domestic Matrix’ contains over 21,000 cells … Goods and Services within the North East Economy = Locally produced + Imports from the rest of the UK + Imports from overseas

12. Goods and Services within the North East Economy = Locally produced + The ‘wages’ element of the intermediate matrix maps to ‘social accounting matrices’. Imports from overseas + Imports from the rest of the UK

13. Incomes by sector and occupation (25x111) FTEs by industry and occupation (25x111) Headcounts by FT, PT & self employed by sector (3x111) FTEs by industry and qualification (7x111) Wage costs etc.