Report on impact of Covid shows challenges faced by region but also positive signs for recovery



The full impact of Covid-19 on the economy and communities of the West Midlands has been set out in an annual report providing an honest stocktake of how the region has fared over the last 12 months.

After a difficult year, the report highlights the challenges that need to be confronted – but also points to signals of confidence in our recovery.

State of the Region 2020 has been developed by the West Midlands Combined Authority (WMCA) and its partners to help inform Government, local authorities, businesses and others of the key challenges and where joint action needs to be targeted to drive a recovery that will improve the region’s wellbeing, economy and environment.

The report, which has been written by the University of Birmingham-based West Midlands Regional Economic Development Institute (WMREDI) and will be presented to the WMCA Board on Friday June 25, shows how Covid has impacted on the progress the region had been making before the pandemic struck.

Initial baseline forecasts say the regional economy (GVA) shrunk by around 9% in 2020 from £106bn to £97bn. It is not expected to regain its previous size until 2022.

But the academic research also found signs of encouragement. Forecasting models show relatively strong regional growth in 2021, and latest forecasts have been revised upwards with the success of the vaccine rollout.

The number of people with qualifications improved markedly over the last year with 36% of people in the West Midlands now qualified to NVQ4+, an increase of 10%, its highest level since records began.

The report says the region has demonstrated amazing resilience in the face of the pandemic, through business innovation, redesign and adoption of technology which, along with successful regional support programmes, have enabled businesses to adapt, pivot and prosper.

Next year’s Commonwealth Games will also provide a unique opportunity to drive action to tackle the issues in the region’s hardest hit sectors, especially hospitality, while demonstrating to the world what the region has to offer post pandemic.

However, findings set out in State of the Region clearly show the impact of Covid on businesses and communities. Pre-pandemic levels of employment may not return until 2023 with the region’s unemployment claimant count almost doubling last year, hitting young people hardest. New apprenticeships also fell by almost 19% to 25,800.

The report also draws on previous research set out in the Health of the Region report which showed how social inequalities, especially around health and wealth, have been exacerbated by the pandemic. It shows the West Midlands as having the UK’s highest fuel poverty rate (17.5%) and that overall deprivation is high with 34.5% of local neighbourhoods being in the top 10% most deprived areas nationally.

Andy Street, Mayor of the West Midlands and chair of the WMCA, said: “This report is open and honest and shows where the region stands after more than 12 months of upheaval and uncertainty. There is no question the pandemic has hit us exceptionally hard, but we have to use this report as a call to action for the West Midlands.

“That’s why we’re pressing on with our practical plans to get the West Midlands back on track. We’re investing more than £1bn in public transport with new rail stations, cleaner buses, expanded Metro lines, and new cycle and e-scooter hire schemes.

“We’re continuing to develop derelict industrial land, helping to turn eyesore sites into new affordable homes for families or commercial space to help create new jobs. We’re pressing ahead with our ambitious plans to tackle climate change through our #WM2041 agenda, including a mass-retrofitting programme. And, of course, we are working round the clock to get people back into work through my 100k jobs plan, using our training programmes to get people skilled up to work in the good quality jobs of the future.

“We are in a difficult position right now, but I want residents to know that we are utterly determined to get this region back on top once again – and we have the plans to make that happen.”

The report’s figures, generated by on-going statistical monitoring over recent months, have already been used to bring together regional partners to kickstart a recovery set out in the Recharge the West Midlands blueprint agreed by the region last summer.

State of the Region 2020 findings also confirm that the five key challenges set out by regional public sector and business leaders in March this year as the basis for an evolving recovery strategy remain the right ones.

Analysis presented in State of the Region 2020 will now be used to help develop action plans to meet the five challenges - Delivering Good Jobs, Supporting Thriving Places and Communities, Tackling Inequality and Levelling-up, Preventing a Lost Generation and Embed Our Green Ambitions.

Cllr Ian Brookfield, leader of City of Wolverhampton Council and WMCA portfolio holder for economy and innovation, said: “The region has already used some of the evidence in this State of the Region report to shape our ‘Recharge’ strategy and the actions taken to lessen the impact of Covid-19 and kickstart a recovery.

“That has helped but we need to be completely honest about the scale of the challenge we face. This independent report should be a rallying cry for everyone to pull together to make sure our recovery creates a greener and fairer region in which those hit hardest by the pandemic are not left behind.”

Simon Collinson, deputy pro-vice chancellor for regional engagement and director, WMREDI, University of Birmingham, added: “In a challenging year for everyone the evidence presented here shows that the West Midlands region has been amongst the hardest hit by a series of economic shocks.

"A history of rapid recoveries gives us every hope for a quick return to the impressive growth momentum of previous years. But this is also an opportunity to build an even more innovative and a much more inclusive regional economy in the years ahead.”

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