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State of the Region 2020 Full Report

Impact of Covid 19 on our Recovery

Nationally, according to the ONS weekly survey, people think the country is getting kinder, and generally wellbeing remains the same. But since the beginning of the survey people think the country is also becoming more unequal.

Businesses are understandably reluctant to take on debt they may not be able to pay back, and bank lending processes are still an issue due to the length of time taken and the decision making processes. The new bounce back loans seem to have a higher interest. The furlough scheme is working well and making a difference to businesses and whether they can withstand the current crisis.

Safety measures which need to be put in place to combat the virus and ensure social distancing are of significant concern to businesses as premises are often too small to accommodate the demands. Businesses are still concerned about getting staff back to work without transport and adapting to working from home on a longer basis, but for many industries, this isn’t possible. Businesses are still reporting issues with accessing finance through the Covid-19 support schemes due to ineligibility. Quarantine requirements continue to scar businesses as they try and deal with high absence levels. There are also significant issues and implications of track and trace on the operations of businesses

Remaining issues are recovery planning where businesses need advice and support to rebuild. Work by the Enterprise Research Centre shows that sole traders are very exposed, especially female and young entrepreneurs, and this is an issue still being raised by business representative organisations, as often sole traders slip through the current support mechanisms

Although many immediate business issues highlighted over the pandemic period have been addressed, there is still an issue with sole traders operating as limited companies who fall through the cracks. Cash reserves are still being used extensively but this may run out.

Local lockdowns are of significant concern to businesses, especially the manner in which Leicester has been closed, with little warning. There is little understanding of what the lockdown might look like and how it might impact.

The rise in job losses and those claiming benefits points to the need for investment in lifelong learning, better skills development and utilisation; effective local partnerships; reducing skills mismatches and helping people take greater responsibility for their own learning and development. The potential levels of unemployment facing the region will call for significant scaling up of training at a time when providers are facing uncertainty driven by social distancing and individual choices about investment in skills. Significant changes are happening in working practices, such as homeworking and technology changes which are creating a polarisation in employment opportunity and could leave many behind. The importance of key workers to a thriving economy has also been exposed.

“Social distancing is of serious concern”

“businesses need advice on adopting new business models”

Businesses in the region need to diversify to be more resilient, evidence suggests that more diverse economies and businesses are better able to whether economic shock. Businesses are seeking greater support in how to do this, how they develop new products, services and markets and recovery planning should include funding to accelerate this.

A recent report by NESTA has identified the West Midlands ‘business-led innovation region’ where above average levels of business investment in R&D are not matched by public sector investment. This business led investment is under threat within the post Covid-19 economy and there is a need for a rebalance of the public sector investment. There needs to be a supercharged approach to backing the decisions of the private sector with additional public sector funding. Recommendations include: greater transparency of decisions making; regional devolution of innovation funding; new science and tech institutions outside the SE; UKRI to lead regional rebalancing; Strength in Places Fund developed and expanded

Innovation around business models is crucial to recovery but it is important to focus on individual resilience as well as business resilience. Analysis of the West Midlands Regional Entrepreneurship Ecosystem demonstrates that the weakest parts are around financing, innovation and skills. So financing prospects for potential entrepreneurs is an area of concern and investment in internationalisation is also a priority.

Generally business feedback is that government intervention is working. Businesses are also seeking clear guidance on how to return to work in a social distancing based economy. Businesses need to understand how they return to work. This includes access to PPE, implementing social distancing measures and dealing with their workforce wellbeing. There is a  need for guidance and support in planning for recovery, including business diversification and operating in social distancing environments.

Levelling up is going to be a challenge, as London and the South East have a more resilient economy, and poorer areas are going to be hit harder. There needs to be clearer devolution, with powers and funding, to support local areas tackle the levelling up agenda.

Our ability to move around has been severely curtailed, this has impacted at all levels. Affected trade, education and tourism significantly which is driving most of the economic risks and downturn. Lack of public transport has impacted on the more vulnerable in society and continues to constrain businesses opening and customers returning. The lack of national and international mobility has changed our supply chains and is impacting on attitudes towards resilience.

“Businesses are reluctant to take on debt”

“Cash reserves are depleted”