Executive Summary
The West Midlands is one of the largest conurbations outside London, its central location puts it at the heart of the UK’s transport networks and international connections. The region was one of the most prosperous areas of the UK until the 1970/80s, and in the last 5 years it has been experiencing a resurgence of that power on the back of the growth in the business and professional services sector; technology driven manufacturing and city centre construction growth; thriving city centre based international business and professional services sector which was driving high levels of business tourism; a manufacturing base becoming more productive and an automotive sector responding to the challenge of a carbon neutral future; high exports, foreign direct investment and strong international links, and the biggest higher education cluster outside London. The region broke through the £100bn GVA barrier and had been bucking the national trend on a host of economic indicators, such as enterprise and employment growth. All this was powered by a young workforce, increasing its skills and moving to the region. However, underlying this growth there were significant issues with inequality, poverty, youth unemployment, low skills, poor health and school performance.
The economic impact of the Covid-19 pandemic has been severe. First quarter UK GDP fell 20% compared to last year, manufacturing PMI hit an all-time low and 496,000 people across the 3 LEP area are on furlough in June 2020, the equivalent of all jobs in Birmingham. Despite the general stasis felt by the economy through furlough and lockdown, the overall claimant count has nearly doubled overall and for young people.
Sectors where we have previously seen growth and expansion are now hardest hit, such as construction and the expanding higher education sector which makes our 3 cities, Birmingham, Coventry and Wolverhampton vulnerable. Our largest employment and GVA sector (professional, businesses and financial services) is still resilient and the sectors hardest hit through furlough (retail, hospitality and tourism) could bounce back providing consumer demand returns.
Economic forecasts consistently show the West Midlands to be one of the UK regions hit hardest by the economic crisis. This is because of our industrial and demographic mix, with some local economies among the most vulnerable in the UK in terms of their sectoral composition and health vulnerability. Those same models also show relatively strong regional growth in 2021, but this depends on assumptions about future market demand and international trade agreements. The stakes are high everywhere, but particularly so in the West Midlands.
However, our economic performance over the last 10 years since the last recession should give us confidence that with the appropriate support from Government, we can return to growth rapidly.