This week, the first Covid-19 vaccination in the world was carried out in the West Midlands. Although there are signs of optimism following this, longer-term uncertainty over the Brexit deal continues.
- European equity futures have risen following stocks rising in much of Asia and the U.S. S&P 500 closed at an all-time high.
- In Washington, Treasury Secretary Steven Mnuchin has presented a new $916 billion Covid-19 relief proposal to House Speaker Nancy Pelosi, which is a breakthrough in the months-long standoff between the Trump administration and the House of Representatives on a Covid relief package.
- Industrial production in Germany, Europe’s biggest economy, has risen by up 3.2% in October.
- The sixth consecutive monthly rise in production is attributable to a substantial and large increase in the Automotive sector. It followed gains of 0.5% in August and 2.3% in September. Economists had expected a 1.6% gain.
- Brexit negotiations continue to falter with current reports suggesting both sides saying gaps remain, making a deal less likely. This has spooked investment markets making them volatile with the pound dropping as much as 1.6% in the day. Leading retailers have highlighted that food costs will rise in the event of a no-deal.
- Data has shown that that factory orders rose 2.9% in October, nearly double what economists had predicted.
- Mike Ashley is reportedly in talks about a takeover deal that could see Ashley’s Frasers Group operate Debenhams’ 124 stores under 12-month licenses and potentially save up to 12,000 jobs. Frasers confirmed rumours about a takeover deal, saying the aim is “save as many jobs as possible.”
- In more uplifting and hopeful news, the UK has begun administering doses of the Covid-19 vaccine from Pfizer and BioNTech on Tuesday, making it the first Western country to do so. The inoculation effort is well underway at about 50 hospitals and marks the National Health Service’s biggest immunization campaign in its history. The first person in the world to receive the vaccine outside of trials was Margaret Keenan from Coventry.
- Make UK has published a report that sets out manufacturer’s opinions on levelling up and the effect of current infrastructure projects on their regions, with 52% being neither satisfied nor dissatisfied with the work in their region, suggesting that they saw no tangible difference. Calling on the government to focus on local projects, particularly east-west connectivity and broadband, the paper argues that regional differences create strength in the UK manufacturing sector.
- The Health Foundation looks at how the NHS and social care need proper funding in order to meet the demands of the long terms effects of COVID-19 and to meet the NHS long term plan.
- Localis provides analysis on the Government’s Ten Point Green Plan, praising the commitment to net-zero by 2050 and the funding and job creation it promises, but they are concerned that some of the funding is recycled, with less new money than it may seem.
- The Higher Education Policy Institute analyses the results of students and their experiences at university during the pandemic so far. Whilst 59% are satisfied or very satisfied with the teaching they are receiving, 58% feel that their mental health is worse since the beginning of the pandemic, putting increasing pressure on universities to provide adequate mental health support.
- A brief from the Resolution Foundation looks at that the economic outlook for the UK following COVID and Brexit, both of which are predicted to shrink the economy by 3% and 1.5% respectively. Real per capita funding for some public services will remain curtailed, including transport and justice, and the report does not expect a highly centralised approach to addressing regional inequalities to be effective.
- Initial City Centres work shows that:
- They hold 3-5% of all WMCA residents, and they have grown over the last decade.
- The centres are younger and more ethnically diverse than the overall Local Authorities.
- They contain higher levels of deprivation, especially on the fringes.
- In terms of footfall in cities, there was a large drop off at the start of the pandemic, which was slowly recovering over the summer, but this has dropped off under the second lockdown. Footfall from outside of the city has dropped off considerably and most activity is from within cities. ONS footfall shows that nationally footfall decreased by 43% and we would expect this pattern to be reflected in future data on the dashboard. This level is still not as low as the first lockdown.
- The city centres contain the highest levels of jobs, and sectorally they have high concentrations of business and professional services, retail, culture/hospitality, all sectors hit hard by furlough, closure or working from home.
- The public sector is particularly high in Birmingham, but when health is added there is a significant presence in the city centres. Health therefore is potentially driving the residual traffic in the city centres.
- There has been a further drop in permanent job placements, which has been counterbalanced by a sustained upturn in temporary billings in November. This is according to a KPMG / Markit report on the UK labour market. Job vacancies have fallen at a quicker rate, driven by a steep decline in permanent vacancies. Candidate numbers have continued to rise steadily, with the ready availability of permanent and temporary staff rising at historically high rates, driven by redundancies. Starting pay of permanent staff continues on its downward trend, whilst temp staff pay has declined at a more modest rate.
- Incorporations are up on last year and dissolutions are below the same week last year.
- For West Midlands businesses that indicated they had sites that had paused or ceased trading, 22.7% stated they it was not financially viable to keep open, 69.7% were required to temporarily close due to lockdown regulations and 13.8% reported insufficient footfall of customer interest. While 6.9% reported the reason as other and 3.3% were unsure.
- 5% of trading businesses in the West Midlands reported profits had decreased by at least 20%. However, 34.3% of trading businesses in the West Midlands reported that profits had stayed the same and just over 8.4% reported their profits had increased by at least 20%.
- 2% of West Midlands businesses said that they were intending to make changes to supply chains in preparation for the end of the EU transition period, while 51.7% of West Midlands businesses reported they were not. 24.7% were going to use more UK suppliers, 9.3% were going to use more EU suppliers and 7.2% were going to use more non-EU suppliers. 16.5% of West Midlands businesses were going to move the supply chain away from the short straits crossing. 21.6% of West Midlands businesses were going to increase the diversity in suppliers and 15.5% were going to expand to different modes of freight.
- 8% of exporting businesses in the West Midlands reported their businesses were still exporting but less than normal. Of those businesses who continued to trade and import, 25.2% in the West Midlands were importing less than normal. 55.6% of West Midlands businesses who were exporting reported that they had not been affected and 57.8% reported that importing had not been affected.
- 8% of West Midlands businesses reported more staff were working from home as a result of COVID-19. 10.3% of West Midlands businesses reported that productivity had increased with the workforce working from home. 54.0% of West Midlands reported productivity had stayed the same. 23.9% of West Midlands businesses reported they intended to use increased homeworking as a permanent business model going forward. 40.9% of West Midlands businesses reported they would not have homeworking as a permanent business model with a further 35.3% unsure.
- The main reasons why West Midlands businesses intend to use homeworking as a permanent business model going forward include;
- 73.2% reported it improved staff wellbeing
- 56.4% reported it reducing overheads
- 37.2% reported it allowed the ability to recruit from a wider geographical pool.
The weekly monitor brings together data and intelligence from the WM REDI partnership into one single source which can be shared and utilised in planning and responding to the challenge of the virus. This is a rapid review of the issues. It is not intended to be a comprehensive assessment but rather a practical report which places emphasis on emerging issues and the best data and intelligence we have to date.
The monitor is feeding into the regional recovery planning that can help the regional economy bounce back and quickly move forward once lockdown restrictions start to be lifted.
The work is being endorsed by political and business leaders a task force of experts are being set up through WM REDI partners to better understand the impact of the lockdown and what measures will be needed to get the economy moving again.
City-REDI / WM REDI has developed a resource page with all of our analysis of 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 that here.
The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI or the University of Birmingham.