WM REDI has been tasked with providing an up to date monitor of the current COVID-19 economic impacts, on a weekly basis. These reports will help regional partners to shape responses and interventions to boost the region’s resilience so that it can thrive going forward. Each week the focus of the report is based on research and evidence published that week.
Key points:
- PMI has dropped to an all-time low in the region at 10.9 (growth would be above 50 and recession under 50). It is expected that we will have the worst recession in history, with March seeing the biggest GDP fall since records began and IMF predicting a drop in GDP close to 6% and likely to take 2 years to recover.
- Registered deaths within a month are dropping, however, a number of organisations are looking at the excess deaths, which are running much higher (in some cases 30% higher than the registered COVID-19 deaths) and are unexplained, this may be due to under-reporting in the absence of testing, and indirect deaths due to people not going to A&E when necessary. However, there has been a shift and as daily deaths in hospitals are dropping there are now nearly as many deaths registered in care homes as in hospitals. Groups that are most exposed to the virus include:
- Care and Medical sector staff
- Low paid workers
- Women
- Black and minority ethnic groups.
- Reviewing the 1918 pandemic for wider economic, social and longer-term impacts, some key issues can be seen emerging now, most notably higher death rates in the poor, disadvantaged communities. Variability was attributed to inequalities of wealth and social status, bad diet, crowded living conditions which created an environment where the poor, immigrants and ethnic minorities were more susceptible to infection. As a result, cities were hit harder and it took 2 years to recover, with generally 3 peaks, the second more severe due to early lifting of lockdown measures in some countries. These unequal impacts are being seen today. The inequalities following on from a world war drove a global wave of social unrest, strikes and a drop in trust of governments.
- Although many immediate business issues highlighted in previous monitors have been addressed, there is still an issue with credit in the region and nationally, with many firms extending payment terms and reducing payments. Cash reserves are still being used extensively but this may have stabilised, potentially due to loans coming through the system and furloughing is taking effect.
- The university sector continues to be of high concern in the region due to the significant number of jobs and direct and indirect effects, this sector is also underpinning some of the dramatic drops in forecast performance. The instability of the university sector will also affect the future innovation capacity in the region and the support given to businesses to increase resilience as a result.
- Applying OBR forecasts to the region the public sector (including Education) and the cultural/visitor economy will be hardest hit and there is still significant risks of redundancy and company collapse in businesses reliant on the aerospace and automotive sectors.
Before the onset of COVID-19, the West Midlands region was in a period of significant growth, based on a burgeoning Construction sector; a thriving city centre international Business and Professional Services sector also driving high levels of Business Tourism; a manufacturing base becoming more productive and an automotive sector responding to the challenge of a carbon-neutral future; high exports, foreign direct investment and strong international links, and the biggest higher education cluster outside London. All powered by a young workforce. However, underlying this growth there were significant issues with inequality, poverty, youth unemployment, low skills, poor health and school performance.
COVID-19 could exacerbate our weaknesses and undermine our assets. This means we need to protect our assets and ensure they survive and then build their recovery on a resilient infrastructure, which encourages diversifying and supporting local growth, employment and supply chains. At the same time, we need to develop new ways of working internationally in a tech-based future.
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.
Download and view a copy of the West Midlands Weekly Economic Monitor.
City-REDI / WM REDI have 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.
This blog was written by Rebecca Riley, Business Development Director, City-REDI.
Disclaimer:
The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI or the University of Birmingham.
To sign up to our blog mailing list, please click here.