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 there are more local lockdowns and more announcements of redundancies. The UK’s previous approach to retaining staff post the 2008 recession, seems to be changing. As reported in earlier in monitors businesses are reshaping business models and realising they don’t need as many staff as they once did or they are removing retail provision in favour of online homeworking customer service staff. This has significant long term impacts on the employment and job prospects going forward.
- Italy and Sweden are maintaining their control of the virus, but Spain has risen again, with the UK putting restrictions in place on travel.
- The IHS Markit managers’ index climbed further above the 50 mark that separates growth from contraction, rising from 50.1 in June to 53.3 in July. New orders and business confidence all improved compared to last month, with output climbing to 59.3, which is the highest level since November 2017
- The owners of the Bullring are reportedly struggling to avoid the fate of Intu. Other significant announcements include, Jaguar Land Rover i54 loses, Tui retail closures, Pendragon making 1800 redundancies and closing 15 stores, and Selfridges cutting 450 jobs.
- Local lockdowns have been imposed in Greater Manchester, East Lancashire, West Yorkshire and Aberdeen. Restrictions were introduced overnight without legislation in place for a further 6 days. This has created confusion at a local level. Restrictions affect people meeting in homes, family-based childcare and the return to pubs and restaurants.
- Infection rates are slowly rising nationally, in the West Midlands, the main spike is Sandwell, which last week came down again from 27.7 to 17.4 per 100,000.
- The Bank of England Decision Maker Panel expects employment to be 1.6pp lower every quarter to 2021. Sectorally accommodation and food are predicted to be hardest hit, with sales down by 77% in Q2 2020 to being down 18% by Q1 2021. Investment is also expected to drop in this sector along with Transport and Storage with both sectors sustaining high drops in investment ending at 49% and 46% in Q1 2021. Based on panel responses potential employment impacts for the West Midlands (region) by Q1 2021 could be a fall of 9% or an additional 200k.
- There has been a 76% take-up rate (175k eligible) for the self-employment scheme. The highest average claim was in the financial and insurance activities sector at £4k, and sectorally the other service activities sector has the highest numbers of claims.
- Key capital assets in the region are under some threat from the impacts of COVID-19, key threats include:
- Economic recession
- Reduced Foreign Direct Investment (FDI)
- A drop in consumer demand
- business investment including Research and Development (R&D)
- A reduced take-up of public transport and the movement of people (especially international movement)
- Reduced student intake (especially international)
- Mental health impacts
- This could impact negatively on the Commonwealth Games, Capital of Culture and regional tourism assets, along with major transport developments such as UK Central, HS2 and Metrolink. Major innovation assets are also at risk, such as WMG, MTC and the Life Sciences Park if investment falters and public R&D is reduced or not distributed regionally. Wider mental health and social capital could also undermine assets as confidence hits people’s willingness to take part and engage with opportunities.
- The WMCA has developed a citizens’ panel and their key issues are living with coronavirus, health and jobs as the ‘big 2’, green recovery as a means to an end in terms of mental health and jobs, and avoiding a lost generation.
- Leaders across the regions and all the declared West Midlands Mayoral candidates are calling for greater powers (especially fiscal) and devolution in the upcoming White Paper on devolution and recovery. The LGA calls for local leaders to focus away from bidding for grants to one of outcomes and rewards for achieving them.
- Footfall has increased this week to 60% of levels at the same time last year, with retail parks at the strongest at 80%.
- More businesses (91.2%) are trading in the West Midlands than nationally (86.4%) and have been for more than 2 weeks. 62% of businesses regionally have said their turnover has decreased by at least 20%.
- In the West Midlands, the largest industry to pause or cease trading was accommodation and food services activities at 8.1%. Businesses are reporting less trade than normal UK levels. 15% of business have stopped capital expenditure.
- Nationally 73% of adults met up with others to socialise. 47% of adults always maintained social distancing, while 8% stated they rarely or never maintained social distancing. 24% of adults are continuing to work from home.
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 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.
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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