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State of the Region 2020 Full Report

Key Issues

Since the start of the pandemic the West Midlands performance has changed dramatically, as is the case everywhere throughout the UK and elsewhere. Key issues are:

  • Forecasters are now coming to a general consensus that the UK is looking at a sharp fall and slower recovery over at least 2 years, with some sectors taking longer to recover. This relies on a post Brexit trade deal, no further lockdowns, a credible vaccine and return of consumer spending. The prolonged international lock down, lack of travel, and social distancing may change attitudes to what consumers value and need in the longer term, the effects of which we have yet to see emerge. 
  • The West Midlands may face the largest economic decline of all regions at 9.2% (fall in GDP), however it may see the largest growth in 2021 at 8.1%. This is based on having the largest number of temporary closures and an expectation of most reopening. This however is far from certain and will be affected by social distancing measures and the implications of a second wave and continued lockdowns. Businesses regionally feel there is limited expectation of a consumer bounce-back due to social distancing. Businesses have utilised spare cash and resources and are reluctant to take on debt. 
  • The youth claimant count had risen to 41,225 by May 2020, 8.3% of the young population, nearly doubling youth unemployment. It now sits 5th amongst combined authority areas but the rate of increase was much higher than elsewhere. As a region with high numbers of young people, we have a population facing multiple impacts from the pandemic. Closure of sectors which employ them, education system changing rapidly to cope with social distancing and the loss of final term in schools weakens the transition points between school, further and higher education and employment.
  • Overall claimants stand at 208k, which is 6.3% of the working age population a rise from 115,000 and 3.5% in February, however overall increase in claims has been slower than other areas. This is despite the extensive furloughing which stands at 496k people in the WMCA area, which equates to 26.9% of jobs and is seen by business as the most successful of interventions. Businesses are flagging that although this is an excellent policy approach, it may just be moving the redundancy problem down the road if consumer spend and business activity doesn’t return and they aren't supported to adapt
  • Headline analysis suggests that the public sector (including higher education) and the visitor economy sector will be the sectors most impacted from the Covid-19, followed by construction, manufacturing and retail.  Analysis suggests that the life science and healthcare may be the only sector that will be relatively unscathed, but notably it is also one of main sectors that has took the brunt of the human impact from Covid-19. 
  • Apprenticeships: the CA has the highest level of available vacancies compared to other regions, 1,643, which is a positive for the region. However this has declined recently, and recent business surveys show a decline in training and apprenticeship opportunities

  • The WMCA area had the highest death rates at the start of all CAs but dropped down the rankings in later months.  Overall however the 3 LEP geography has had the most deaths at over 4000. The pandemic hits cities harder. Pandemics hit denser, poorer, urban populations more, as social distancing is harder and over crowding more common

  • Purchasing Managers Index (PMI) show business activity has dropped from 51.2 (over 50 signals growth, under 50 signals contraction) to 10.9, the lowest levels ever and back to 27.9. To be expected in these extraordinary conditions. However the PMI future business activity is holding up rising from 55.9 to 62.1 (down from 72.3% signalling businesses are positive about the future once lockdown ends