UK Powerhouse Report Reveals Daily GVA Fall Of £245m
A new report has revealed the daily impact of the coronavirus lockdown on the West Midlands’ economy and highlighted which sectors are performing the strongest and protecting the UK from even greater damage.
According to UK Powerhouse, a report by Irwin Mitchell and the Centre for Economic and Business Research (Cebr), GVA* is estimated to be falling in the region by 40%, or £245m a day during the lockdown.
The report says that as one of the major centres for manufacturing in the UK, the West Midlands is more vulnerable than others to a significant fall in demand for products in this sector. Manufacturing loss in the region accounts for just under a third of the total GVA lost, at £81m per day.
The West Midlands also has a relatively small professional service economy with financial and insurance activities accounting for 6% of the total share of pre-COVID GVA, compared to London where it accounts for 13%.
This lower proportion of professional service infrastructure means the region’s ability to work from home during lockdown has been more limited and hence there is a significant impact on the total GVA lost per day.
Despite claiming that the UK economy is losing £2.7 billion a day in absolute terms, the Irwin Mitchell report says some sectors such as agricultural, forestry and fishing, along with the information and communication sector, have remained strong with a relatively low daily GVA fall of 14% and 2% respectively.
It adds that a national 1.3% rise in the share of the workforce mainly working from home over the past five years puts the UK economy in a more resilient position in terms of share of people able to work remotely.
Up just 0.9% in the same period, the West Midlands is not as far along as other regions but lockdown could lead to a sea change in to business attitudes to remote working.
Expert Opinion“In absolute terms, the West Midlands does not fare as badly as some other regions but relatively speaking, it is likely to be one of the regions with the highest daily GVA falls. While manufacturing has been hit hard, other sectors are holding their own in difficult circumstances.
“As we all move to a ‘new normal’ post lockdown, different regions are going to come out of this at their own pace and tailored support in key areas could prove vital to economic recovery.
"The last election saw talk of ‘levelling up’ the economy and a challenging task has undoubtedly become harder given the impact of coronavirus. Construction and manufacturing are key areas but the crisis has also highlighted the importance of remote working to business viability.
“The shutdown to halt the spread of Covid-19 is having a dramatic effect on the whole of the UK economy and certain regions are expected to weather the storm better than others. The report offers an insight into what form regional support might need to look like in the West Midlands once we start down the road to economic recovery.”
Chris Rawstron - Partner
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