This week, the Office for National Statistics (ONS) reported that productivity grew at the fastest rate on record in the middle of 2020 when compared with the quarter before, but this fell away again in the last three months of the year. This was mainly because the least productive industries were those hardest hit by the pandemic, and their shrinking size had a positive effect on overall (average) productivity and this has followed through in productivity per hour. This may signal longer-term structural change – the effects of which are yet to be seen.
- Euro Zone economic activity has surprisingly returned to growth this month as factories ramped up production to the fastest pace in over 23 years, offsetting the slowdown in the bloc’s dominant services industry. With a third wave of coronavirus infections and renewed lockdown measures, as well as the slow vaccine rollouts, it is likely that these benefits will be subdued in the coming months.
- The Guardian states that the government risks creating a serious funding gap for science, as delays over budgets and cuts to research are undermining the sector and boasts about Britain’s status as a science superpower. The budget for international development research projects has been cut from £245m to £125m, affecting some universities in the region.
- WMG and the University of Warwick have been awarded £5m in funding and a key coordinating role in the Government’s ‘Driving the Electric Revolution Industrialisation Centre programme’.
- The e-MOTIF project led by Shield Manufacturing Technologies in Southam won support for an £11.3m project from the government to develop and manufacture an energy recovery system to reduce energy use in electric vehicles.
- Stone Yard major residential apartment scheme on the former Bull Ring Trading Estate in Digbeth has been given a £5m boost in funding, by the West Midlands Combined Authority (WMCA).
- The official mascot for the Birmingham 2022 Commonwealth Games was unveiled as Perry, a bull covered in a patchwork of multicolour hexagons. Perry is inspired by the design of ten-year-old Emma Lou, the winner of a national design competition that took place over the summer of 2020.
Covid Impacts
- Between the 8th of December 2020 and 14th March 2021, the Midlands has successfully vaccinated 4,060,212 people with the first dose and 188,433 of these individuals have received the second dose. It has provided the most doses of the first jab and remains in 3rd place for the second dose out of the English regions.
- Overall UK retail footfall for the week to 13th March 2021 was at 47% of the level seen in the same week of the previous year. This increased by 5 percentage points when compared with the equivalent index in the previous week.
- This week the BBC has reported that the Government has announced a £5,000 fine for anyone in England trying to travel abroad without good reason, to come into effect next week as part of the new coronavirus laws. However, another surge in Covid cases in continental Europe, as well as the slow rollout of vaccines across Europe, has cast doubt on the resumption of foreign travel.
- Shelter reports that 14% of adults, or one in seven people, are worried about being made homeless due to the pandemic, with half of private renters facing poor mental health as a result of worries over bills and finances. The research also shows 24% of private renters are having to borrow money to make their rent.
- The Resolution Foundation has released a review of the policy decisions of the last 12 months, highlighting many successes but also the consistent, damaging failure to enter lockdown early enough.
- The Lancet shows that vaccines alone will not completely manage COVID, but vaccines alongside appropriate non-pharmaceutical interventions will sufficiently keep it under control.
- Bank of England Q1 2021 highlights:
- Spending on consumer goods and services continued to be weaker than a year ago, as stores and venues remained closed due to Covid-19 restrictions, but there were signs of demand re-emerging in some sectors.
- Business services activity remained weaker than a year ago. Activity in some sectors held steady or improved, though Covid-related restrictions and the adjustment to new trading arrangements with the EU weighed on activity in some areas.
- Manufacturing output remained markedly weaker than a year ago, reflecting a variety of factors relating to EU withdrawal and Covid.
- Construction output continued to be lower than a year ago, partly due to subdued demand from sectors worst affected by Covid, though public projects continued.
- Demand for credit increased slightly; credit availability tightened for sectors most affected by the pandemic.
- Demand for housing remained strong, but investor demand for commercial property was mixed.
- Companies’ investment intentions picked up modestly but remain weak, with plans mostly conditional on demand recovering over the coming months.
- Employment intentions remained weak but are improving; pay growth was subdued but some contacts plan modest increases this year.
- Contacts reported significant increases in raw materials costs, but so far there is limited evidence of higher costs being passed on to customers due to competition and uncertainty about demand.
- PWC report on the closure of chain stores impact, the largest net decline in stores as the loss approaches 10,000 for the first time. There are 48 chain stores closing a day, with only 21 openings. The West Midlands saw 1,468 shop closures and only 600 openings in 2020. Location matters above all else, with retail parks more resilient to closures.
- ‘Rebuilding Prosperity: A Report for Change’, challenges the traditional models of policymaking, prosperity and growth, arguing that rebuilding prosperity in the wake of Covid-19 requires not just radical, brave economic and social policy on a scale not seen since the 1942 Beveridge Report, but a redefinition of prosperity and of policy-making.
- The COVID decade report suggests seven strategic goals for policymakers to pursue: build multi-level governance; improve knowledge, data and information linkage and sharing; prioritise digital infrastructure; reimagine urban spaces; create an agile education and training system; strengthen community-led social infrastructure, and promote a shared social purpose.
- iGov Survey has partnered with procurement specialists YPO to examine how local authorities are responding to COVID-19. Challenges presented by the pandemic have led to greater collaboration across local authorities– 72% of participants report collaborating more closely with their procurement teams.
- Early estimates for February 2021 indicate that there were 28.3 million payrolled employees in the UK, a fall of 2.4% (-693,000 people) compared with last year. The number of payrolled employees increased by 0.2% in February 2021 – equivalent to 68,000 people.
- There were 216,195 claimants aged 16 years and over in the WMCA (3 LEP) area in February 2021, an increase of 9,495 people when compared to January 2021. This was a 4.6% increase compared to an overall UK increase of 5.3%. For the WMCA (3 LEP) area, when compared to March 2020 (117,590) the number of claimants has increased by 98,605 (+83.9%, compared to +112.4% for the UK).
- There were 42,620 youth claimants in the WMCA (3 LEP) area in February 2021, this is an increase of 1,705 young people when compared to January 2021. This equates to an increase of 4.2%, while the UK increased by 3.9%.
- Areas seeing the largest change are areas are Stratford-on-Avon (192%), North Warwickshire (142%) and Warwick (136%). These are also the top areas of change for youth claimant count. Although actual numbers are lower than in other areas, this change puts pressure on services. In terms of volume Birmingham tops both total and youth claimants at 84,120 (70.4% increase) and 16,340 (77.2% increase).
- The weakening in job vacancies in February is more evident among smaller companies; businesses employing one to nine employees had increased vacancies at a faster rate than other-sized businesses in the second half of 2020, but they had 10.7% fewer vacancies from December 2020 to February 2021 compared with a quarter ago.
- Lockdown restrictions continue to affect jobs and vacancies in two industry sectors more than others:
- Accommodation and food services industry down 79.8% (73,000) from a year ago and 45.1% from the previous quarter;
- Vacancies in arts, entertainment and recreation are down 72.6% (16,000) from a year ago and 37.1% from the previous quarter.
- EMSI data shows there were 113,689 unique job postings across the WMCA 3 LEP geography in February 2021, 13.8% fewer than in January 2021. This is the second consecutive month that the monthly job postings have shown a declining trend. All 19 local authority areas recorded a negative change compared to January 2021. Bromsgrove and North Warwickshire were hardest hit (-18%), closely followed by Cannock Chase, Redditch, Walsall and Wolverhampton (-17%).
EU Exit impacts
- The government is creating four regional trade hubs to boost economic growth across the UK. The Secretary of State for International Trade stated that the hubs will be located in Edinburgh, Cardiff, Belfast and Darlington.
- Government-led research, shows exports support 6.5m jobs across the UK, 74% of which are outside of London. The report also found that jobs directly and indirectly supported by exports pay around 7% higher than the national median. But new data from the Office for National Statistics (ONS) shows UK goods exports to the European Union fell 40.7% in January 2021. Some are questioning why the government has chosen Darlington as the two regions with larger manufacturing and export regions in England are the North West and the West Midlands.
- In the year to December 2020, the West Midlands region’s export value was worth £24.5bn, a decrease of £7.2bn (-23%) when compared to the year ending December 2019. The UK saw a decrease of 16% to £293.6bn worth of exports in 2020. The West Midlands imported more than £29.6bn worth of goods. This has decreased by £7.1bn (-19%), while the value of all UK imports decreased by 14% to £419.6bn. The West Midlands had a trade deficit of £5.2bn in the year ending Q4 2020.
Download and view a copy of the West Midlands Weekly Economic Monitor.
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.
This blog was written by Anne Green, Professor of Regional Economic Development at City-REDI / WM REDI, University of Birmingham.
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.