City hammered by the pandemic – but set to start its recovery early
THE hardest hit towns and cities in the East Midlands are expected to come back from lockdown faster than other parts of the UK, according to a new study.
Along with Leicester and Nottingham, Derby is predicted to start its recovery sooner, the PwC-Demos Good Growth for Cities report found.
It suggested the make-up of the region’s economies, and variety of different industries there, will help in the fight to get back to normal over the coming years.
This is despite recognition that young people entering the labour force in one of the toughest economic environments will make employment opportunities even more competitive and potentially undermine social mobility efforts in the region.
The PwC-Demos report suggests Derby and Nottingham both saw their economies contract by more than 11% during 2020, but are expected to have the best levels of growth in 2021 – at about 5% and higher.
Leicester’s economy shrank by about 12.2% last year, and while performing okay, according to the PwC Good Growth Index, it will be one of the cities hardest hit economically, after stricter restrictions last summer hit things like city centre retail.
Even with a return to normal trading conditions – something that has not even been guaranteed with the vaccine rollout – the city economies will still be smaller in 2021 than they were in 2019.
The region’s position on the main motorway networks has also helped it become an important area for warehousing and logistics – a sector that has benefited from people shopping at home through the lockdown.
While passenger flights have been grounded, East Midlands Airport has seen big growth in cargo flights.
PwC concluded that as politicians plot the course out of the downturn they should learn from cities such as Oxford, Leicester, Leeds and Edinburgh, which had been performing more strongly over the longer term pre-pandemic, in areas such as jobs, health and skills.
The report calls for even more resources to go into addressing structural issues post-lockdown – improving skills, jobs for young people, new business development and addressing environmental challenges – while directing effort and resources to the towns and cities that need them the most.
Other key findings of the report show Derby has one of the lowest rates of workers on furlough, with 6.4% of its workforce on the job retention scheme during 2020. Nottingham, meanwhile, had the lowest increase in the take-up rate of universal credit at 2.6% between January and November, 2020, compared with Birmingham which had the third highest increase at 4%.
Ali Breadon is the East Midlands market senior partner and Midlands government and health industries lead at PwC.
She said: “As a whole, cities in the East Midlands have performed well on the environment, owner occupation and income distribution measures on the index.
“However, this positive performance is also coupled with lower scores in skills, health and work-life balance.
“High unemployment rates, especially for young people entering the labour force in one of the toughest economic environments, will make employment opportunities even more competitive and potentially undermine social mobility efforts in the region.
“The pandemic has led to people
The pandemic has made us more aware of inequalities and why it is important to level up across the UK. Ali Breadon
living their life much closer to home and the likelihood is some of these lifestyle changes will stay for the mediumterm.
“Citizens will value different things and those places that meet those needs will be the ones that bounce back quicker.
“This opens up opportunities for places that have advantages in terms of liveability and community, and where price of success factors, such as housing affordability, are less of an issue.
“The report sets out a series of recommendations for leaders from across the region and local government, as well as the private and third sectors, as they plan their recovery strategies.
“Taking a broad approach to economic wellbeing and building resilience will be essential to create liveable, vibrant places where people want to live, work and visit.
“The wider regions’ significant growth over the past five years and long-term growth ambitions and investments in HS2, Coventry City of Culture and the Birmingham 2022 Commonwealth Games will also encourage the right conditions for a recovery.”
The Demos-PwC Good Growth for Cities Index ranks 42 of the UK’s biggest cities based on the public’s assessment of 10 key economic wellbeing factors, including jobs, health, income and skills, as well as work-life balance, house affordability, travel-to-work times, income equality, environment and business start-ups.
PwC’s GVA analysis took into account the main industries in each city, the use of the furlough scheme to protect jobs, rates of universal credit claims, Covid infection and mobility rates to project GVA growth rates for 2020 and 2021.
It said the cities performing well include Edinburgh, Aberdeen, Norwich,
Swindon, Southampton and Oxford.
Poorer performing cities include Liverpool, Southend, Medway, Doncaster and Bradford. Ali Breadon said: “The pandemic has made us more acutely aware of existing economic and social inequalities and why it is so important to level up across the UK.
“It reinforces our view in Good Growth for Cities of the necessity to look beyond GDP and headlines about the North-South divide to focus efforts on tackling the issues that really matter to the public – and local economies – such as skills, sustainable income and health and wellbeing.”