Steel City Set To Be Bottom Six City With Just £200m Growth By End of 2022
A new economic report predicts mixed fortunes for Sheffield compared to its neighbours in 2022 with a lower than anticipated bounce back in terms of employment and growth.
The latest UK Powerhouse report by law firm Irwin Mitchell and the Centre for Economics and Business Research (Cebr), shows that the city’s GVA* is expected to increase by 6.9% by Q4 2021; placing the city 16th bottom out of the 50 cities surveyed for economic growth.
By the end of Q4 2022, the city is projected to have dropped a further 10 places to 6th bottom, with just 2.2% growth or £200m added to the steel city economy in 12 months.
Employment prospects in the city are also projected to be lower than might have been expected. Given the large decrease in employment in Q4 2020, the recovery by Q4 2021 will only be 2.0%, placing Sheffield in the bottom 20 cities for employment.
By Q4 2022, the city is expected to have entered the top 20 for employment growth, but a modest 1.5% rise will only add 4,600 new jobs, when more might have been expected from a base of -3.7% in Q4 2020.
Sheffield usually benefits from the 60,000 students in its two universities, but as remote learning has continued, any consumer activity driven by the city’s students has been significantly reduced from where it was. Entertainment and food services will have suffered, despite both Sheffield Hallam and Sheffield University continuing to employ 12,000 staff between them.
The Boeing manufacturing site was proclaimed as a big boost for the city, but with the ongoing disruption to new aircraft construction due to the reduction in air travel, this sector has only seen partial recovery in 2021.
By contrast, Leeds is projected to be the 5th best performing city in the UK for employment by the end of Q4 2022, with 2.2% year on year growth; while over the Pennines in Manchester, annual GVA growth is expected to be 7.3% in Q4 2021, and will see a 2.5% rise in Q4 2022.
The latest Powerhouse findings confirm a 400 page council health report, which concluded the pandemic had added “terrible news to bad news” to a city where deprived constituencies had seen the most furloughed workers and likewise predicted further job losses to come.
The city’s iconic John Lewis store closed its doors in March and saw the end of an era for one of Sheffield’s best known landmarks since 1847 and underlined the need for change.
The UK Powerhouse report makes several recommendations that could assist business recovery post-pandemic. These include the adoption of technology, that while has been adapted by some tech savvy businesses already; some traditional markets still lag behind. The use of digital tools is now here to stay and there are many who need to discover there is much more to this revolution than collaboration tools and Zoom calls.
The report also urges business to adapt to and take advantage of the UK’s Brexit status where possible, acknowledging there are opportunities for firms to grow their share in domestic markets, while still seeking global opportunities.
Finally, the report recommends that all sectors need to take full advantage of the post-pandemic headwinds, by positioning themselves for growth. In practice, this means resuming normal operations as soon as practicable and taking steps to fill vacancies in the business to capitalise on a likely surge in consumer spending before this reverts to more normal levels.
Expert Opinion“The latest UK Powerhouse report does make sobering reading for Sheffield and confirms our own past research and the work done by others that the road to recovery will not be easy.
“Whilst there are no simple solutions, lockdown and the loss of retail like John Lewis and Debenhams is an opportunity for a reset and to focus again on the city’s strengths.
“The timing of the pandemic could hardly have been worse, for retail and those that have provided inward investment to the city region, the £470m flagship heart of the city project now takes on a new significance and importance. If it can successfully spearhead the process of regeneration, there’s no reason why the city can’t recover.”
Dorrien Peters - Partner
Irwin Mitchell’s report also examines to what extent disruption in the economy leads to innovation.
Here the study reveals that the South West and the South East have the largest share of businesses engaged in innovative activity. According to the study, 41% of businesses in the South West are defined as innovative.
Hannah Clipston, a partner at Irwin Mitchell, added: “Businesses have been incredibly resilient over the last couple of years and have faced many disruptors including COVID-19, labour shortages, supply chain issues and high fuel costs.
“Our latest study recommends that irrespective of the sector they’re in, organisations should be adopting technology more quickly and adapting to the UK’s new status after Brexit.
“All of this will require a shift in approach and for innovation to be celebrated and nurtured more than it is currently. It’s vital that businesses are encouraged to follow this path and receive the right level of support in order to help them succeed.”