This fortnight the key data release is the long awaited GVA for 2020, which is the first one to reflect the impact of Covid-19. The region has kept its economy above the £100bn mark but dropped to £102bn, a decrease of 4.5% (generally across all GVA indicators the region performs poorly against the UK). This pattern is also reflected in more recent quarterly GDP for the region as a whole. In the world of politics turmoil continues, with a vote of no confidence in the Prime Minister, which sees him remain leader. The issues reported in previous monitors around availability of skilled staff, trade and cost pressures continue to make doing business increasingly difficult. Overall, business leaders have welcomed the cost-of-living package to support households announced by Government but have stressed that businesses also need support.
- A report from the Public Accounts Committee into the use of evaluation and modelling in government has concluded that “departments are not meeting government requirements on publishing evaluation plans and findings” or on “transparency of models and their outputs”. More than one-third of chief analysts saying they are “only sometimes” able to publish evaluation findings as required.
- More than 40,000 staff from National rail and 13 train operators are expected to take part in what will be the biggest rail strike in modern history. This week the dates for the 3-day strike have been announced as the 21st, 23rd and 25th of June.
- The government has scrapped plans to build a new £3bn rail link between HS2 and the West Coast Main Line. The 13-mile (21km) Golborne Link in Cheshire and Greater Manchester (which affects connectivity to Cheshire from the West Midlands)
- Around one million people attended more than 700 events in Coventry during its year as UK City of Culture 2021, such as Radio 1’s Big Weekend, the 2021 International Booker Prize, and the opening of The Reel Store – the UK’s first permanent immersive art gallery. Early analysis reveals Coventry’s packed programme saw 389,705 tickets issued for live events with a further estimated audience of 136,916 attending unticketed live events across the city.
Economy
- HSBC UK has launched a £15bn lending fund for small and medium sized businesses, with £1.5bn ring-fenced to support local economies, employment opportunities and drive growth across West Midlands.
- Together the Ukraine and Russia account for about 30% of global wheat exports, 20% for corn, mineral fertilisers and natural gas, and 11% for oil. Prices for these commodities increased sharply after the onset of the war, as supplies reduced of these goods began to fall. Now there is high risk of a food crisis.
- Global GDP growth forecasts have been revised down, to around 3%, and will remain at a similar pace in 2023. This is well below the pace of recovery projected last December. Growth is set to be markedly weaker than expected in almost all economies.
- GVA has decreased from £107.8bn in 2019 to £102.9bn in 2020. This equated to a 4.5% annual decrease, reflecting the UK-trend (-3.4%).
- GVA per head has decreased from £25,689 in 2019 to £24,411 in 2020. This equated to a 5.0% decrease, a larger decline than the UK-wide rate of 3.8%. The shortfall for the WMCA (3 LEP) area to the UK was £4,652 (UK: £29,063) in 2020.
- Business, Professional & Financial Services remains the largest sector in terms of GVA at £30.2bn (29.3% of the total), but this sector decreased by 3.2% (-£983m) between 2019 and 2020.
- Two sectors for the WMCA (3 LEP) area increased between 2019 and 2020. These were; public sector inc. education, increasing by 7.9% (+£1bn) to reach £13.2bn and life sciences and healthcare increasing by 12.6% (+£1.1bn) to nearly £9.9bn.
- GVA per employee was £55,479 in 2020; this was a 3.6% (-£2,088) decrease from 2019. England decreased by 1.2% to £65,210 per employee, leading to a shortfall of £9,731 for the WMCA.
- Quarterly GDP analysis shows for the West Midlands region there was a contraction of 0.5% in Q3 2021, while England overall increased by 0.6%. Across the nine English regions, three regions had positive growth, five regions had contractions and one region recorded 0% change.
- There was positive growth in GDP for three sectors in Q3 2021; the services sector by 0.1%, agriculture, forestry and fishing sector by 3.9% and the construction sector by 4.9%. The production sector had a contraction in GDP by 5.5%.
- Nationally, between the 13th and 20th May 2022, total online job adverts increased by 6.5%. The West Midlands online job adverts decreased by 7.6% and on the 20th May 2022, it was at 149.8% of the average level in February 2020.
- As of the 20th May 2022, for the West Midlands region visits to retail and recreation, transit stations and workplaces had not yet returned to pre-coronavirus levels (following national trends).
- The System Average Price (SAP) of gas increased by 41% in the latest week to 22nd May 2022 (from the previous week), 35% higher than the equivalent period from the previous year and 265% higher when compared to the pre-Coronavirus baseline.
- Excluding “not sure responses”, 18.2% of West Midlands businesses reported that the business turnover in April 2022 when compared with the previous calendar month had increased, 42.9% reported turnover to have stayed the same and 30.9% reported turnover had decreased
- 5% of West Midlands businesses reported that prices had increased. 44% of West Midlands businesses report that energy prices are the cause for considering to raise prices in June 2022.
- 46% of West Midlands businesses reported that they have been affected by recent increases in energy prices. 52.9% of West Midlands businesses have had to absorb the costs from the price rises.
- 8% of West Midlands businesses expect that the number of employees in June 2022 will stay the same and a further 25.1% expect the number of employees to increase. Although, 5.3% of West Midlands expect the number of employees to decrease
- The most common actions reported by adults who reported their cost of living had increased continued to be spending less on non-essentials (56%), using less gas or electricity at home (50% – down 1% from previous period), cutting back on non-essential journeys in vehicles (39% – down 1% from previous period) and spending less on food shopping and essentials (36% – down 1% from previous period).
Levelling up
Research into international cities tackling levelling up highlights several reasons for progress:
- Shared political will and partnerships: each was vital in overcoming political differences and uniting public and private institutions around a common vision.
- Clear strategy and vision: each city set out what it should look and feel like as a place to live and work.
- Investing for the long term: a commitment to scale and longevity in funding is imperative.
- Local knowledge: an in-depth understanding of the strengths and weaknesses that drive local economies, and an ability to build on those strengths.
- Monitoring and evaluation: a system that allows for policies and programmes to be regularly sense-checked and updated in a timely way that benefits total performance.
- Adapting national frameworks to address local needs
- Diversification: the ability to design policies that enable growth strategies to take root and thrive relies on the strength of a local narrative.
- Key players: individuals and private organisations can serve as enablers of growth, leading by example.
- Adequate and responsive funding: identifying where and when finance is made available can be as important as the policies themselves.
Download and view a copy of the West Midlands Economic Monitor
City-REDI / WMREDI has developed a resource page examing the impact of Coronavirus (COVID-19) on the West Midlands and the UK. It includes previous editions of the West Midlands Weekly Economic Monitor, blogs and research on the economic and social impact of COVID-19. You can view it here.
This blog was written by Anne Green, Professor of Regional Economic Development at City-REDI / WMREDI, University of Birmingham.
Disclaimer:
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.