West Midlands Weekly Economic Impact Monitor – 28th August 2020

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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 relates to research and evidence published that week.

This week across Europe infection rates continue to rise and in the region concern about lockdowns has continued with Birmingham placed on the list of Local Authority Watchlist areas on the 21st August as an area of enhanced support, while Sandwell remained an area of concern. Universities have continued dealing with admissions. Students received their GCSE results and grades are higher in 2020 than in 2019. Positively, a variety of indicators show that on growth and performance the West Midlands is outperforming many other UK regions.

  • Nationally private sector companies reported a sharp and accelerated increase in business activity in August. Regionally the NatWest West Midlands Business Activity Index rose sharply from June to July.
  • Restructuring is continuing in retail with redundancies in this sector and also accommodation & food services and manufacturing. There is evidence of some smaller retailers having bounced back to pre-lockdown levels of activity.
  • Concerns about the end of furlough and uncertainty regarding Brexit trade deals continue.
  • Latest returns show that by the end of June 619,800 workers in the WMCA 3-LEP area had been furloughed, representing a take-up rate of 34% of those eligible. For comparison, the UK take-up rate was 32%.
  • Much of the labour market emphasis on furlough and the COVID-19 crisis more generally has focused on young people. This is particularly the cases in the WMCA given its relatively youthful population. Take-up of furlough nationally is lowest amongst 41-55 year olds, before rising with age. Older workers becoming unemployed are at greater risk of becoming long-term unemployed than younger workers; they are less likely to return to employment after redundancy; they are less likely to participate in training than younger people; some perceive that their labour market opportunities are curtailed by ageism – which is perhaps exacerbated by COVID-19 health risks.
  • The Interim Report of the West Midlands Regional Health Impact of COVID-19 Task and Finish Group highlights interlinked health, socio-demographic and economic impacts of COVID-19. It notes that the health risk associated with older age is lower in the WMCA area than the national average. This is countered by other risk factors including occupation and ethnicity, plus the prevalence of excess weight, diabetes and deprivation. The report emphasises cross-cutting inequalities relating to ethnicity, gender, disability and vulnerability. The economic effects of COVID-19 and uncertainty in employment prospects present challenges for mental health. It notes the importance of maintaining a balance between developing a cohesive regional approach and understanding the specific needs, assets and priorities of local communities.
  • With Birmingham appearing on the watchlist as an area of enhanced support there are ongoing concerns about the implications of any local lockdown. Local lockdowns in the UK to date have varied in scope and scale. In the Leicester area, the situation was predominantly one of delayed reopening. In Greater Manchester and parts of Lancashire and parts of West Yorkshire, there have been bans on household gatherings. In Aberdeen, there has been a more stringent 3-week local lockdown in August. Key issues arising in local lockdowns include some confusion about who is in charge and that it can be hard for people to know what they should be doing. The fact that these local lockdowns have coincided with the main summer holiday period and the differences between local lockdowns means that it is hard to make comparisons and extrapolate from these cases to other local areas. At this stage evidence on the economic impact of local lockdowns is limited. High-quality data – including on business sentiment – is needed.
  • A review of the regional dimensions of the pandemic underscores the uneven geographical distribution of the pandemic within countries, exacerbating intra- and inter-regional inequalities. Other issues of interest include the spatial-industrial organisation of value chains and environmental issues – in both the short- and longer-term.
  • The COVID-19 crisis has led to renewed concerns about the ‘quantity’ of employment but has also highlighted the importance of the foundational economy where low-paid workers such as those in social care have been on the frontline. Good quality jobs (i.e. ‘good work’) is central to levelling up. In policy terms ‘good work’ is not just about discrete interventions, but rather is about making the whole employment and skills system work better.

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 Professor Anne Green, Professor of Regional Economic Development, City-REDI  / WM REDI, University of Birmingham.

The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI or the University of Birmingham.

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