New Report Suggests West Midlands Will Be Amongst The Fastest To Recover From COVID Crisis
A new economic report suggests that Birmingham will be one of the ten fastest cities to recover from lockdown restrictions and Brexit uncertainties this year, with similarly strong economic news for the wider region.
The new UK Powerhouse report by law firm Irwin Mitchell and the Centre for Economics and Business Research (Cebr), predicts that Birmingham will make a rapid recovery and deliver the 9th fastest year-on-year GVA* growth of the 50 cities** analysed by the end of 2021.
Making up for lost ground in 2020, Birmingham will rise from 17th place in Q4 2020 in terms of economic output, to 9th, with annual GVA growth of 7.1%.
In line with many other big cities, the end of the furlough scheme is expected to contribute to a fall in employment by the end of the year. With 15% of workers in the city using furlough, from a mid-table position in Q4 2020, employment is projected to contract by 1.0% by the end of this year. This will see Birmingham drop 10 places in the study’s employment growth league table.
With the wider region predicted to benefit from a positive economic output, the lack of an uptick in employment may be explained by changing lifestyle and employment patterns. Nearby Solihull takes number one spot for the fastest GVA growth by the end of 2021. The report says that that the leafy large town is benefitting from fewer residents commuting into central Birmingham as a result of the pandemic. It predicts that this will become a lifestyle preference once restrictions are lifted - at least in the short term.
Only 36% of cities in the report are expected to increase employment levels following the end of furlough, but with Birmingham already following some of the report’s recommendations for improving prospects for businesses, UK Powerhouse says that there are grounds for optimism for the future.
The recommendations in Irwin Mitchell’s latest report encourage firms to take advantage of policies to stimulate investment and improve skills and invite local government to have bespoke plans in place to support job creation when the furlough scheme ends.
With an established enterprise zone and investment plans in place, Birmingham is seen as having the pieces in place to prosper and to build on a strong manufacturing sector that makes up 14% of the local economy.
While Brexit will continue to be a focus for uncertainty and is expected to have far-reaching implications; in the short term, the West Midlands is one of three regions identified has having the least exposure to the impact of Brexit through the services industry. This is due in part to having the smallest share of SMEs that export services to other nations, as well as its manufacturing strength and forthcoming projects in years to come.
In the longer term, the government has already announced a £778m investment for Birmingham and the West Midlands to stage the 2022 Commonwealth Games; while longer term plans are in place to maximise the anticipated benefits of HS2, which is set to arrive in the late 2020s.
Chris Rawstron, a partner and Head of Business Legal Services at the Birmingham office of Irwin Mitchell, said:
Expert Opinion“This latest UK Powerhouse report paints a positive economic picture for Birmingham and the wider West Midlands regions as we emerge out of lockdown.
“With Foreign Direct Investment also on the rise with 30 projects in the last available figures, if the government can make our trading relationship with Europe run more smoothly, there is much to be positive about in terms of local, national and FDI.
“The employment figures may reflect a longer term trend of people moving away from big cities to work increasingly from home, but we need to avoid any complacency and look for initiatives to boost employment growth, in line with the wider success of the local economy.
“Being in the top performing cities in terms of economic output should provide the scope needed to act on the recommendations and be ready to further stimulate the local jobs market once the furlough scheme comes to an end.” Chris Rawstron - Partner