Powerhouse Report Reveals A GVA Loss Of 37% Due To Covid-19
A new report has revealed that Wales is losing £79m a day due to the coronavirus lockdown.
The UK Powerhouse report prepared by Irwin Mitchell and the Centre for Economic and Business Research (Cebr) shows Welsh GVA* has been reduced by 37% during the current crisis.
With 14% of Welsh GVA attributed to manufacturing, lockdown restrictions have seen the sector face the largest loss in GVA at £22m a day.
The report shows the impact of lockdown has been compounded by Wales having fewer ‘high skilled’ service roles, with just 6.3% of all GVA generated in Wales from financial and insurance activities. Such service roles find it easiest to work remotely, and a lower concentration of such occupations implies a larger overall GVA loss.
The high concentration of manufacturing firms and a large service sector has meant fewer parts of the workforce are able to work from home and this, coupled with falls in consumer spending has made the lockdown a difficult period for the Welsh economy.
With many lockdown restrictions falling under the jurisdiction of the regional assemblies, those with tighter restrictions such as Wales and Scotland have also seen a slightly higher fall in output.
For instance, construction sites have been closed in Wales but permitted to operate elsewhere; while Wales also has a higher proportion of service GVA attributed to roles requiring face-to-face interactions and have thus been most affected by lockdown restrictions.
While home working has shielded the economy in some regions, only 3.5% in Wales had worked from home prior to the lockdown. This meant Wales and parts of the UK unfamiliar with home working were at a disadvantage when entering the lockdown, in terms of both the experience and preparedness for conducting business from their residence.
To calculate the UK’s impact (and the regions), Cebr calculated the pre-COVID GVA per day. To assess the lockdown’s impact, it estimated demand and supply-side impacts for each of the sectors below – these impacts include elements such as ability to work remotely, proportion of workers off sick, actual demand for the products and supply-chain disruptions that the lockdown has caused. As such, each sector listed below has an estimate of the impact of the lockdown and is presented in absolute terms and a percentage loss.
* Gross value added