Manchester In Top 20 Cities For Economic Output By End Of The Year But Furlough End To Hit Jobs
A new study predicts Manchester will be one of the top 20 UK cities to emerge from lockdown and the uncertainties associated with Brexit on an economic high this year, but the increase in economic output will not be matched with rising employment prospects.
The latest UK Powerhouse report by law firm Irwin Mitchell and the Centre for Economics and Business Research (Cebr), predicts a positive annual GVA* rise of 6.9% by the end of the year for Manchester.
The increase will take the city from 38th in 2020 to 10th by the end of 2021 in the report’s league table of fastest growing economies**.
Despite all economic restrictions due to be lifted by the summer, only 36% of cities in the report are expected to increase employment post furlough and Manchester is not among them.
Not all the 14% of Manchester employees on furlough are expected to retain their roles and from being the 11th best performing city in terms of employment in Q4 2020, the city is expected to slip to 27th by the end of this year, with a -0.7% fall in annual employment growth.
The UK Powerhouse report makes several recommendations to tackle some of the obstacles faced by businesses and to improve overall employment prospects going forward. These include urging firms to take advantage of policies encouraging investment and improving skills, while calling on local government to have job creation plans in place for when furlough comes to an end.
The report acknowledges Greater Manchester’s local industrial strategy, which includes strengthening programmes to support business to improve productivity.
This involves following up on the success in advanced manufacturing, aimed at making the city and the wider region a leading area for innovative firms to develop advanced materials. The Northern Powerhouse investment fund has also been active in the city and since 2011 investing equity finance into northern SMEs.
While London is the city expected to be hardest hit by Brexit, 12% of SMEs in the North West exported services to the EU in 2019, up from -7% in 2016-19 and suggesting the region is exposed to restrictions on trade. The region came bottom in terms of generating turnover from exporting services, on £80,200, which argues Manchester may need to do more to up its exports and encourage further foreign investment.
Duncan Hope, a Commercial Dispute Resolution partner at Irwin Mitchell’s Manchester office, said:
Expert Opinion“The report paints a positive picture for Manchester in terms of economic growth for this year. While recognising the efforts the city has made to support local business, it also warns that more will need to be done in the North West to stimulate the long term jobs market once furlough ends and investment will be key.
“Foreign Direct Investment projects in the city have declined slightly, but their value as part of an overall package of economic growth and employment prospects cannot be underestimated.
“The report makes clear the government has a role to play in making the TCA agreement work and any smoothing of the path to greater trade and investment opportunities can only help cities like Manchester and the North West as a whole emerge strongly from the twin effects of Brexit and the pandemic.
“The economy as a whole has avoided a double dip recession and Manchester is set to see strong economic growth over the coming months. Manchester will be one of the UK’s major cities driving positive economic output and with the right local and national support; we can translate this economic bounce into a springboard to solving employment concerns on the horizon.” Duncan Hope - Partner