This fortnight, with a new PM in place, leading business representative organisations, including the CBI, FSB and the Chambers of Commerce have called for certainty and stability from the new Prime Minister to restore business confidence in the UK. They are calling for Rishi Sunak to restore fiscal credibility, stabilise the economy and deliver much needed support for businesses. This is whilst data shows there is increasing fear around costs and the future within households and businesses nationally.
Climate and energy
- Provisional State of the Global Climate 2022 report, released on the 26th of October, which claims that the past eight years were on track to be the warmest on record. The report also details that global methane production has seen its largest increase on record with its causes still being investigated
- The Emissions Gap Report 2022 details that currently there is no credible pathway from the Paris agreement goals to get the agreed 1.5C needed to limit global warming
- The System Average Price (SAP) of gas decreased by 20% in the week to 30th October 2022 (from the previous week), it was 74% lower than the equivalent time in the previous year; however, it was 102% higher when compared to the pre-Coronavirus baseline
- 0% of West Midlands businesses in the last three months have switched electrical equipment to standby or off more than usual when not in use to reduce energy costs. While 33.0% of West Midlands businesses have made no changes in the last three months.
- 2% of West Midlands businesses plan to switch electrical equipment to standby or off more than usual when not in use to reduce energy costs in November 2022. While 27.2% do not plan to reduce energy consumption
Population
- The 2021 Census has found that the residential population of England and Wales has increased to its highest ever level at 59,597,542.
- The population is getting older with median age of England and Wales was 40 years, higher than the previous median age of 39 years in 2011. The region with the lowest median age was London at 35 years. there 24.8 million households in England and Wales, which is an increase of 6.1% from 23.4 million in 2011. 51.7% of households (12.8 million) in England and Wales were deprived in at least one dimension.
- The number of people who were born outside the UK has increased by 2.5 million since 2011, the latest census data shows. According to ONS this has increased from the 2011 census from 7.5 million which is around 13.4% of the total population to 10 million, which accounts for around 16.8% of the total population of the UK. In 2021 more than 4 in 10 (40.6%) of residents in London were non-UK born and more than 1 in 5 (23.3%) had a non-UK passport
- Across the WMCA the 2021 Census has revealed that the LA which has the lowest Median average was Birmingham at 34, followed by Coventry at 35 driven by high student populations
- LAs with the lowest proportion of households not deprived in any dimension being Sandwell 37.9%, Walsall 40.2% and Wolverhampton 40.3%.
- Coventry, Birmingham, Sandwell and Wolverhampton all have over a fifth of residents born outside of the UK. Whereas, Cannock Chase, North Warwickshire, and Lichfield all have below 5% of its population born outside of the UK.
Economy and Politics
- International politics continues to be in turmoil as various elections are underway, including the US where inflation and abortion rights are swaying voters. In the east missile strikes off the coasts of North and South Korea, underpins the international instability of governments
- The Bank of England recently increased its benchmark rate from 25% to 3%, this is eighth consecutive increase since December 2021, pushing the rate to its highest level for 14 years
- With interest rates rising, about 6 million people on tracker and variable rate mortgages will see an immediate increase in their monthly payments
- Out of the 28 categories of Adzuna job adverts, 15 decreased; the largest weekly decrease was in “education”, which fell by 9.4% (to 108.5% of the average level in February 2020). “Part-time / weekend” online job adverts remained at the same level over the period at 135.8% of the average level in February 2020. In contrast, the highest increase was in “management/exec/consulting”, rising by 3.3% (to 101.2% of the average level in February 2020).
- There was a mixed picture for online job adverts across the UK regions as 8 regions decreased, and 4 regions increased between the 21st and 28th October 2022. The West Midlands online job adverts increased by 0.2% and on the 28th October 2022, it was at 122.0% of the average level in February 2020. All 12 regions were above their February 2020 levels
- 79% of all adults reported being very or somewhat worried about rising costs of living in the past two weeks (77% in the previous week).
- 32% of those who are currently paying rent or mortgage payments reported that these payments have gone up in the last six months (33% in the previous period).
Business environment
- Areas of priority for the West Midlands include a longer-term package of support measures on energy bills, and fully costed proposals to deal with labour shortages, spiralling inflation, and climbing interest rates as part of a long-term economic plan for growth and levelling-up.
- Consumer confidence is at historically low levels according to Deloitte, while the FSB track small business pessimism as at its worst outside lockdowns: a net confidence score of -35.9 in Q3 2022, down 11.2 points compared to the previous quarter.
- The current environment is increasing the vulnerability of many businesses, not least through reduced liquidity. Figures from restricting trade body R3 show that the Midlands is home to the largest number of companies with late payments outside Greater London, while EY report that the number of profit warnings issued to listed companies in the Midlands increased during Q3 2022. In total, 86 profit warnings were issued nationally between July and September 2022, compared to 51 in the same period of 2021.
- 1% of West Midlands businesses reported that employees’ hourly wages in September 2022 when compared with the previous calendar month had stayed the same. While, 18.2% reported an increase and 1.3% reported a decrease in hourly wages
- 9% of responding West Midlands businesses reported that exporting stayed the same in September 2022 when compared to September 2021. 21.6% of West Midlands businesses reported to exporting less and 14.7% reported to exporting more.
- 0% of responding West Midlands businesses reported that importing stayed the same in September 2022 when compared to same month in the previous year. 13.2% of West Midlands businesses reported to importing less and 15.0% reported to importing more.
- 5% of West Midlands businesses were able to get the materials, goods or services it needed from within the UK in September 2022. Although, 12.6% of West Midlands businesses were only able to get the materials, goods or services it needed but had to change suppliers or find alternative solutions and 7.5% were not able to get materials, goods or services needed.
- 0% of West Midlands businesses reported experiencing global supply chain disruption in September 2022. In contrast, 47.0% reported none
- 26.7% of West Midlands businesses expect the main concern for business in November 2022 will be inflation of goods and services
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.