Economy in region could shrink by up to 35pc

THE damage to the West Midlands economy caused by Covid-19 and the lockdown will be the worst the region has seen since the Second World War, mayor Andy Street has warned.

Mr Street, former managing director of John Lewis, said Covid-19 would have a “devastating” effect on jobs and the economy.

He backed the Government’s “furlough” scheme, designed to stop jobs being lost, but warned further investment would be needed to retrain workers whose jobs could not be saved, and called for “effectively some sort of subsidy on returning to work”

The West Midlands, like other parts of the country, has been affected by economic downturns including the banking crisis and the recession of the early 1980s which hit manufacturing in particular.

But asked how the pandemic and lockdown would affect the West Midlands economy, Mr Street said: “There is no question about it, it is a devastating effect, far beyond anything we’ve ever see here since the war, which is a gruesome thing to admit.”

He declined to speculate on how many jobs would be lost, saying:

“All we have are hypotheses at the moment and we don’t know which of those will come true, because we don’t know how long and deep it will be.

“It clearly is incredibly serious, there is clearly going to be a huge impact.”

The mayor highlighted research which suggested the West Midlands economy could shrink by 35 per cent over three months and, although it would later grow again, would be 10 per cent smaller after 12 months.

It means the West Midlands is expected to be the region worst affected by the economic downturn.

The mayor is calling for four key measures to try to reduce unemployment. They are:

To save as many jobs as possible through the furlough scheme

To proceed with, and speed up, investment in major capital projects such as HS2

To get behind industries that will create jobs in the future, such as electric vehicles

A major government-funded retraining and employment support fund for people whose jobs are gone for good. This would be a scheme “which encourages employers to take people back – effectively some sort of subsidy on returning to work”.

Mr Street said he welcomed Prime Minister Boris Johnson’s decision to start easing lockdown restrictions, though he stressed that the Government had only taken “baby steps”.