West Midlands Economic Impact Monitor – 15 December 2023

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As 2023 draws to a close, the challenges of inflation (although falling) and low growth remain. The cost of living, the NHS and the economy are key concerns for the general public. However, businesses in the West Midlands are still optimistic as indicated by the Future Business Activity Index.

Global, national and regional outlook
  • The OECD has released its November Economic Outlook update. The global economy continues to confront the challenges of inflation and low growth prospects. Global growth is projected to be 2.9% in 2023 and weaken to 2.7% in 2024. As inflation abates further and real incomes strengthen, the world economy is projected to grow by 3% in 2025.
  • Annual OECD headline inflation is expected to fall gradually to 5.2% and 3.8% in 2024 and 2025 respectively, from 7.0% in 2023.
  • According to the ONS figures monthly GDP in the UK is estimated to have fallen by 0.3% in October 2023, following growth of 0.2% in September 2023.
  • The most recent ONS update for the value of exports and imports of goods and services showed that the value of goods imports increased by £3.6 billion (8.2%) in October 2023, with rises in imports from both EU and non-EU countries. The value of goods exports increased by £0.4 billion (1.2%) because of increased exports to non-EU countries, while exports to the EU decreased.
  • ONS insights on important issues facing society reveal that adults continued to report the cost of living (89%), the NHS (87%) and the economy (74%) as the top three issues. The fourth most important issue remained climate change and the environment, which was reported by around 6 in 10 (61%) adults. Other important issues include crime (60%), housing (59%), immigration (54%) and international conflict (50%).
  • The UK Business Activity Index increased from 48.5 in September 2023 to 48.7 in October 2023. The West Midlands Business Activity Index increased from 49.3 in September 2023 to 50.7 in October 2023. Out of the twelve UK regions, the West Midlands was the second highest for business activity in October 2023.
  • The West Midlands Future Business Activity Index decreased from 78.4 in September 2023 to 73.8 in October 2023 but remained the most optimistic region for the fourth consecutive month.
  • Lower geographic level (ITL3) productivity scorecards have been published by The Productivity Institute, including for West Midlands areas. This suggests that Birmingham, Dudley and Walsall are “falling behind” on productivity compared to the regional and national averages, while Solihull and Coventry are “losing ground”, and Sandwell and Wolverhampton are “catching up”.
Enterprise Births and Deaths
  • In 2022, there were 15,435 enterprise births in the WMCA area. Since 2021, this is a decrease of 6.7% (-1,115), following the national trend (-7.4%). However, when compared to 2017, the WMCA area has increased by 11.9% (+1,640) while nationally there was a decline of 5.6%.
  • In 2022, there were 14,700 enterprise deaths in the WMCA area. Since 2021, this is an increase of 10.0% (+1,335), following the national trend (+5.2%). When compared to 2017, the WMCA area has increased by 7.0% (+965) and nationally there was an increase of 4.2%.
  • In 2022, the WMCA enterprise birth rate remained above the enterprise death rate at 14.4% and 13.7% respectively. This is in contrast to the national trend where enterprise birth rates were lower than the enterprise death rates, 11.5% and 11.8% respectively.
Labour market
  • The latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global, pointed to a second consecutive monthly increase in permanent placements in the Midlands, contrasting with the UK-wide trend. Temporary billings were also up amid improving demand for staff and marked increases in candidate availability. Rates of pay inflation quickened from the previous survey period but remained below average.
  • Permanent placements rose in the Midlands for the second month running in November. The rate of expansion was modest but quickened from October. Moreover, the Midlands was the only English region to record an expansion in permanent placements over the month. The decline in the UK was driven by a severe reduction in permanent placements in London.
  • Some respondents in the Midlands indicated that good availability of candidates had contributed to the latest rise in placements.
  • Although recruiters in the Midlands continued to record an increase in temporary billings midway through the final quarter of the year, the rate of expansion was only marginal and the softest in the current six-month sequence of growth.
  • The Institute for Fiscal Studies (IFS) recently produced a report on the changing geography of jobs from 1993-2022. The report discusses the profound changes seen across the labour market over this period, including the ‘hollowing out’ of jobs in the middle of the pay distribution, rising demand for high-skilled workers, an expansion of higher education and an increase in both domestic and offshore outsourcing.
  • In September 2023, the West Midlands region had over 3.1 million workforce jobs. When compared to June 2023, the West Midlands region increased by 1.1% (+33,490) and the UK increased by 0.6%.
  • When compared to September 2022, this was an increase for the West Midlands region by 4.1% (+123,669) with the UK increasing by 2.2% UK-wide. Notably, the West Midlands had the second highest growth rate (behind North East with +6.1%).
  • In the 2022/23, there were 7,920 apprenticeship achievements. When compared to 2021/22 this has increased by 17.5% (+1,180), following the national trend (+18.3%).
  • In the 2022/23, there were 17,450 apprenticeship starts. When compared to 2021/22, this has decreased by 2.3% (-410), which reflects national trends (-3.5%).
  • In 2022/23, there were 3,790 intermediate apprenticeship starts in the WMCA area, a decrease of 17.8% (-820), compared to England decreasing by 16.7% since 2021/22. There were 7,370 advanced apprenticeship starts, a decrease of 4.0% (-310), compared to England decreasing by 2.2% since 2021/22. There were 6,290 higher apprenticeship starts, an increase of 12.9% (+720), compared to England increasing by 6.2% since 2021/22.
  • There were 124,280 claimants in the WMCA area in November 2023. Since October 2023, there has been an increase of 1.2% (+1,455), while the UK increased by 1.9%. When compared to November 2022, claimants have increased by 3.4% (+4,125), with the UK also increasing by 3.4%.
  • Overall, for the WMCA the number of claimants as a proportion of residents aged 16-64 years old was 6.7% compared to 3.7% for the UK in November 2023.
  • There were 24,185 youth claimants in the WMCA area in November 2023. Since October 2023, there has been an increase of 1.9% (+440) of youth claimants while the UK increased by 2.1%. When compared to November 2022, youth claimants have increased by 11.9% (+2,570), with the UK increasing by 8.1%.
The cost of living crisis and impacts on health and wellbeing
  • The Covid-19 pandemic triggered a health emergency and exposed structural and systemic inequalities in society that have health implications. The cost-of-living crisis is a second health emergency, striking when the Covid-19 pandemic meant many people were already vulnerable.
  • There is increasing recognition that the public’s health is an asset to the wider economy and society; poor health has implications for economic growth and societal well-being.
  • Poor mental health is a direct and immediate response to poverty. On all key personal well-being indicators in the UK – regarding life satisfaction, people feeling the things they do in life are worthwhile, happiness, anxiety and mental well-being – scores declined markedly with the Covid-19 pandemic and remain lower in 2023 than at any time over the last decade.
  • Delays in access to health services, and funding cuts in a cost-of-living crisis to social security, employment support and other services provided by the public and third sector can accentuate adverse health consequences.
  • To alleviate the negative impact of the cost-of-living crisis on health it is necessary to mitigate short-term effects at the same time as tackling the underlying causes of poor health.
International students in the West Midlands
  • The UK is a magnet for international students. According to the Higher Education Statistics Agency (HESA), in the academic year 2021/2022, the UK hosted 679,970 international students, comprising 120,140 EU-domiciled students and 559,825 from various countries worldwide. The number has increased from 442,225 in 2014 (53%) when the data was first recorded by HESA. The West Midlands hosted more than 50,000 international students.
  • The largest numbers of international students are from China, India and Nigeria.
Other features address:
  • Economic inactivity
  • Self-employment
  • Trends in the recruitment sector
  • Social prescribing
  • Changing transport priorities and the role of buses
  • Occupier demand for office space
  • The hospitality sector
  • The space sector
  • WMCA Growth Hub Intelligence

Read the West Midlands Economic Impact Monitor in full.

This blog was written by Anne Green, Professor of Regional Economic Development at City-REDI  / WMREDI, University of Birmingham.

The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI, WMREDI or the University of Birmingham.

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