Welcome to the final monitor of 2020. The monitor was established at the start of the pandemic to look at the impacts as they unfolded and to bring together any available information from across partners. We had not envisaged at the start that this would still be needed thirty-nine weeks later. The WM REDI partners hope you have found the monitor useful and that all our readers have a restful Christmas break, and that next year brings better economic conditions and stability.
This week, the vaccine has started to be rolled out across the region, but there are early signs that forecasters are revising downwards expectations for 2020 and that the recovery will be slower in 2021.
- Although overall deaths have decreased in the region (1,340) those from Covid have risen (381).
- The Deloitte weekly update highlights that a no-deal Brexit is looking increasingly likely, although the two sides are continuing to talk. But should this happen both sides will revert to World Trade Organization (WTO) rules. This will mean tariff barriers in both directions and some services suppliers will no longer be automatically eligible to trade cross-border.
- The West Midlands Business Activity Index has decreased from 51.2 in October to 50.5 in November. Impacts from the second national lockdown are starting to be seen and December will be a challenging month for businesses across the UK. The overall UK Business Activity Index decreased from 52.1 in October to 49.0 in November.
- Out of the twelve UK regions, five recorded a rise in October and the West Midlands had the fifth-lowest Business Activity Index.
- Companies in the West Midlands remain confident for a rise in output in the next 12 months with the Future Activity Index at 70.3 in November. News of vaccine developments boosted sentiment among West Midlands firms.
- Make UK has slashed its growth forecast ahead of the UK’s withdrawal from the EU.
- Output and orders improve but remain substantially below historic averages.
- The forward-looking export picture declines ahead of EU exit, especially for motor vehicles, while export margins also decline.
- The investment picture improves but is now negative for three quarters.
- Employment data suggests redundancies have taken place.
- Manufacturing is expected to contract by 12% this year and the forecast for 2021 is substantially downgraded.
- EY has published their economic outlook this week which also predicts considerably lower performance this year, especially for the West Midlands, and the gap between north and south will continue to widen. Towns will suffer the hardest impacts.
- The region has the same proportion of businesses in the ‘most affected by lockdown category’ as the national average (19.4%) according to the ONS. But the region has a higher percentage of young employees (16-24-year-olds) and young female employees in at-risk jobs in these businesses. This is particularly the case for the Birmingham and Coventry-based businesses. This means that the lockdown events have a more significant impact on regional inequality.
- The COVID-19 pandemic and associated travel restrictions have led to a marked reduction in international travel and immigration to the UK. It has disrupted collection of statistics on international travel and immigration. Across various indicators, there has been a reduction in immigration to the UK. Recession and the introduction of a new UK skills-based immigration system after the Brexit transition period, with equal treatment for EU and non-EU citizens, will impact on employers’ recruitment options and the future volume and profile of international migration flows.
- NINO registrations to foreign nationals show that in the year to September 2020 there was a 51% decrease in registrations to EU nationals and a 24% decrease in non-EU national registrations.
- Around one in four respondents to the Opinion and Lifestyle Survey indicated that they planned to make a big change to their life. Of those planning to make a big change to their life, around one in five indicated that they planned to live somewhere else. Of those planning to live somewhere else, around one in six indicated that they planned to move to live outside the UK in the next 12 months.
- There is no general route for migrant workers to fill low-skilled jobs (i.e. those requiring only short-term training) in the post-Brexit immigration system. The Government has cited the need to invest in staff retention, productivity and automation, rather than rely on new flows of migrant workers as had been possible under free movement. This means that to fill these jobs employers will be reliant on UK and Irish citizens, EU citizens who remain eligible to live and work in the UK and temporary, short-term visa schemes (such as the Youth Mobility Scheme). A seasonal workers scheme for agriculture remains in place.
- All regions and local areas have been impacted by international travel restrictions resulting in reduced international mobility and migration flows as a result of the COVID-19 pandemic. There have been disruptions to registration and survey processes which produce the data on which estimates of international migration are based. Looking forward the plan is for a greater reliance on administrative statistics but inevitably there will be a break in statistical series on international mobility and migration.
- The COVID-19 pandemic may be expected to impact on individuals’ future international mobility behaviour intentions. Concerns about economic recession and Brexit will also influence individuals’ future plans and behaviour. The end of the Brexit transition period and a new UK immigration system means a marked change in the regulatory framework for international mobility and migration. While the intention is to make the UK attractive for skilled migrants, it suggests a reduction in the labour pool of non-UK citizens to fill jobs at the lower end of the labour market where some sectors and occupations have had a strong reliance on EU labour. As and when the economic outlook improves, the West Midlands may see migration to London in response to wage rises that may occur as a result of reduced availability of EU labour. Currently, uncertainty prevails.
- 7% of adults have in the West Midlands isolated in the past seven days (matching the Great Britain proportion). 91% of West Midlands adults in the past seven days avoided contact with others when outside their home (89% overall Great Britain).
- In the West Midlands 34% of adults think it will take between 7 to 12 months before their life returns to normal, the Great Britain total was 33%. 19% of adults in the West Midlands between the 11th and 29th November reported moderate that some form of anxiety likely, this was above the Great Britain average of 17%.
- In terms of the labour market, interventions such as furlough are maintaining the current levels:
- For the three months ending in October 2020, the West Midlands Region employment rate (aged 16–64 years) was 75.0% which has increased by 0.6pp from the previous quarter, the only English region to experience an increase. The UK employment rate was 75.2%, a decrease of 0.5pp from the previous quarter.
- For the three months ending in October 2020, the West Midlands region unemployment rate (aged 16 years and over) was 5.4%, which has increased by 0.8pp since the previous quarter. The UK unemployment rate was 4.9%, an increase of 0.7pp from the previous quarter
- For the three months ending in October 2020, the West Midlands Region economic inactivity rate (aged 16 – 64 years) was 20.6% – a decrease of 1.3pp from the previous quarter which is the largest decrease across all regions. The UK economic inactivity rate stood at 20.8%, remaining unchanged from the previous quarter.
- There were 211,575 claimants aged 16 years and over in the WMCA (3 LEP) area in November 2020, this is an increase of 3,800 people when compared to October 2020. This was a 1.8% increase compared to an overall UK increase of 2.6%. For the WMCA (3 LEP) area, when compared to March 2020 (117,590) the number of claimants has increased by 93,985 (+79.9% compared to +107.4% UK).
- There were 42,850 youth claimants in the WMCA (3 LEP) area in November 2020, this is an increase of 15 people when compared to October 2020. This equates to an increase of 0.04%, while the UK increased by 0.6%. For the WMCA (3 LEP) area, when compared to March 2020 (22,835) the number of claimants has increased by 20,015 (+87.7% compared to +112.9% for the UK).
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.