The latest GDP figures indicate the scale of recovery required as service businesses, including shops, restaurants and hairdressers, begin to re-open their doors this week. However, unlike the recessions of the past, many jobs have been retained (due to furlough and other government schemes), and as lockdowns are in place, many individuals have saved up money and are excited for restrictions to be removed to allow them out to spend it. The next few weeks will give an indication of the future recovery direction.
- Between the 8th December 2020 and the 4th April 2021, the Midlands has successfully vaccinated 5.1m people with the first dose and 760k have received the second dose. The region has successfully continued to provide the most doses of the first jab and has become the 2nd highest provider of the second dose.
- Gross domestic product (GDP) fell less than previously thought in January 2021, down 2.2%, not 2.9% as had been estimated by the ONS.
- The WM Business Activity Index increased from 51.5 in February to 60.7 in March, which is the sharpest rate of expansion in output in seven months and also outperforms the national average. The growth reported was associated with the easing of COVID-19 restrictions, enhanced capacity and new order growth. The overall UK Business Activity Index increased from 49.6 in February to 56.4 in March. Out of the twelve UK regions, the WM region was the second-highest for the Business Activity Index in March 2021, lower only than the East of England (60.9).
- WM Future Activity Index increased from 76.1 in February to 80.2 in March – reaching the highest level since January 2017. The positive expectations are linked to the vaccination programme alongside a roadmap for the lifting of restrictions. Companies also reported that marketing efforts, product diversification and investments will lead to output growth.
- Business confidence in the West Midlands rose 24 points during March to 27 per cent, the highest reading of all UK regions and nations, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
- The Midlands has seen a rebound in hiring activity with vacancies rising at the fastest rate for over two-and-a-half years. According to the latest KPMG and REC, UK Report on Jobs: Midlands, permanent staff appointments rose for the first time in three months and at the steepest rate since July 2018.
- Springboard shows in the week to 3rd April 2021 (when compared to the previous week) that footfall increased by 9% – meaning overall footfall was at 51% compared to previous levels. Retail footfall remains the strongest at 85% the previous 2019 level.
- 40% of trading businesses in the WM reported their turnover had decreased by at least 20%. However, 39% of trading businesses reported that their turnover was unaffected and approximately 11% reported their turnover had increased by at least 20%. 39% of trading businesses reported profits had decreased by at least 20%. However, 38% reported that profits had stayed the same and approximately 9% reported their profits had increased by at least 20%.
- UK car production dropped by 14 per cent in February 2021, according to new figures. The Society of Motor Manufacturers and Traders (SMMT) has said that 105,008 units were produced in the second month of the year, a decline of 17,163. This represents an 18th consecutive month of decline and the weakest February performance in more than a decade.
- Manufacturing was down 4.2 per cent compared to February last year, construction was down 4.3 per cent and services – which make up the bulk of the economy – remains 8.8 per cent down.
- The Apprenticeship Levy Transfer Fund for Small and Medium sized Enterprises (SMEs) has reached the £20m milestone. The Levy has enabled large employers to pledge their unspent levy to fund the training of apprentices at SMEs in the West Midlands. To date, 1,840 apprentices at 613 SMEs have benefited from the fund over the past two years.
- Goldman Sachs has announced that it will be opening a Birmingham office in a push towards the use of technology to improve financial services. The US investment bank’s decision to open a technology centre in the city is a sign of the growing interest among employers in cheaper regional cities with a plentiful supply of graduates.
- Energy Group Engie has also received the green light for a major regeneration of the former Rugeley Power Station site. The long-term aim is to build a mixed-use development of 2,300 low carbon homes and a low-carbon school, 12 acres of employment space and a new country park alongside the River Trent.
- This week it was announced that Tritax Symmetry has been granted planning permission for the first phase of its 320,000sqft Symmetry Park in Rugby for two new logistics/distribution facilities.
- Onward’s report on the importance of making twelve of the UK’s key industries – including aviation, manufacturing, and construction – less stubborn to decarbonisation, finds that they create 62% of the nation’s carbon emissions but represent 23% of UK output and 21% of current UK jobs.
- India overtook Brazil as more than 168,000 new cases were diagnosed; the second-highest number of cases globally. This second wave and sharp increase could affect exports and supply chains globally in the coming months.
- New Zealand has become the world’s first country to bring in a law forcing its financial firms to report on the effects of climate change. The country wants to be carbon neutral by 2050 and says the financial sector needs to play its part.
- The last couple of weeks have seen a resurgence of violence in Northern Ireland, between Unionists and Republicans. According to Unionist leaders, the violence is linked (in part) to tensions over the Irish Sea border imposed due to the UK-EU Brexit deal.
- UCL Hospitals has undertaken a survey to understand the changing attitudes to the COVID vaccine, showing that those who were initially sceptical about it have changed their minds and have either had the vaccine or would be willing to have it. This suggests that age has a greater impact on people’s willingness to have a vaccine, with 25-35 year olds nine times more likely to refuse a vaccine than over 75s.
- The ONS has found that regardless of other factors, having higher qualifications, not having a disability, and being out of work for a short period of time are the factors that are most likely to help an individual return to work. Being older and being from an ethnic minority are also shown to make returning to work harder.
- The World Economic Forum discusses the decline in gender pay parity and opportunities during the pandemic, with 5% of all employed women losing their jobs, compared to 3.9% of employed men. Women also risk experiencing a drop in income and inferior job prospects, as well as a limited representation in politics.
- The ODI seeks to understand the impact of COVID on teacher’s lives, with 59% thinking that over half their class had lost ground in their learning, but also that 62% of teachers felt tired and burnt out in February 2021. Most teachers felt unprepared for online teaching, and that they were working longer hours during the pandemic, leading to an increase in stress levels.
- In total, the WMCA (3 LEP) area had 258k employments furloughed on the 28th February 2021, representing a 14.3% take-up, compared to the UK average of 15.4%. When compared to the 31st January 2021, the number of employments furloughed in the WMCA (3 LEP) decreased by 12,800 people (-4.7%). The UK decreased by 4.8%.
- 7% of West Midlands businesses expected redundancies to happen within the next three months. 12% of West Midlands businesses expected them to occur within the next two weeks. 19% expect redundancies to occur between two weeks and one month and 70% expected redundancies between the next one and three months.
- 43% of West Midlands businesses have switched to LED bulbs to reduce their emissions. 21% reported they plan to adjust heating and cooling systems in the next 12 months to reduce emissions, although 46% do not plan to take any actions.
Key Covid-related issues highlighted by local business in the last couple of weeks include:
- Costs for SMEs increasing due to the specific COVID measures needed in place to trade;
- B2C frustrations for support, especially grants, are rising as the industries such as Hospitality, Beauty, Hair etc are having to spend to put in safety restrictions for opening with little help;
- Lack of support for businesses in the hospitality supply chain;
- Delayed and cancelled projects;
- Impact on recruitment firms as clients stop recruiting and staff on furlough;
- Cashflow challenges as clients default on payments;
- Mental Health & Re-Opening of Retail – Concerns over the general mental health of employees as we emerge from lockdown. Businesses monitoring the situation and will be looking for support in helping staff deal with potential issues. Other businesses nervous about re-opening, particular close proximity retail outlets, such as beauticians and hairdressers, which fear staff infections could close their businesses.
- According to analysis by BusinessRescueExperts, the West Midlands had the 4th highest Corporate Insolvency Ratio in 2020 (1 in 173), at greater risk of company closure compared to the national average (1 in 207).
- Over 15,000 businesses have received free advice from the West Midlands’ Growth Hubs following the UK’s departure from the EU – and this is set to continue.
- UK-EU trade has bounced from a historic low in the previous month, as businesses had to learn to deal with additional paperwork and border friction. The latest official data shows that exports to the EU rose by £3.7 billion in February – or 46.6 per cent – following a £5.7 billion decline in January. EU exports were still 11 per cent below the same month last year.
- 33% 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, 26% in the West Midlands were importing less than normal. 48% of West Midlands businesses who were exporting reported that they had not been affected and 52% reported that importing had not been affected.
- 4% of businesses in the West Midlands are exporting more than normal and 6% are importing more than normal. 4% of businesses in the West Midlands have not been able to export in the last two weeks and 3% of West Midlands businesses have not been able to import in the last two weeks.
- In recent weeks though, there does appear to have been a distinct reduction in businesses seeking support with EU Exit related issues. This may reflect that businesses are now more able to adapt to the initial “teething problems” earlier in the year. However, the impact on trade in 2021 is stark, as identified by the British Chambers of Commerce’s Trade Confidence Outlook for Q1.
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.