The Midlands is home to 11 million people and contributes £239 billion to the UK economy. It is an area of innovation and enterprise; a ‘young region’ providing talent for future wealth and prosperity, it is a region that is indispensable to the nation’s post-pandemic recovery. The COVID-19 pandemic has hit the area hard, with the West Midlands reportedly the worst hit region in the UK where over a quarter of the Midlands businesses are reporting a decline in trade as a result of the pandemic. The Midlands hosts a diverse economy with its rural and urban mix; manufacturing, higher education, creative industries and visitor economy are all key sectors and have been deeply impacted by the pandemic. 

The West Midlands’ economy is expected to shrink by 10.6 per cent in 2020 as it battles the ongoing impact of coronavirus, according to new research. It is a further slip after financial services firm KPMG predicted the region’s economy would fall by 9.1 per cent in its last quarterly Economic Outlook report, published in June. The firm said its latest forecasting model suggested Stratford-upon-Avon and North Warwickshire would be hit hardest among the West Midlands’ districts, with drops in GVA of 14.4 per cent and 12.7 per cent respectively. 

Meanwhile, the Malvern Hills area looks set to face the lowest impact, with a reduction in GVA of 8.3 per cent, the report suggests. UK-wide, KPMG is forecasting GDP decline of 10.3 per cent for 2020, downgraded from 7.2 per cent predicted in June, with growth of 8.4 per cent in 2021. 

To accelerate the levelling up agenda, the Government’s aim should be to tailor sector opportunities to local conditions. These should dictate what is needed for investment in skills, transport, digital and social infrastructure. Manufacturing and technology will be key to the levelling up agenda. Although a difficult near-term is forecast for the sector, opportunities are there longer-term and must not be ignored or forgotten.

Investment for advanced manufacturing, automotive, software and computer services and business and consumer services are leading sectors in the Midlands. This also includes a strategy to maximise opportunities for the region for the 2022 Commonwealth Games. 

Let’s not forget  the clear given commitment to its major infrastructure, commercial and residential development projects, the success of the West Midlands as a UK regional hub looks set to continue, regardless of the anticipated economic downturn caused by the Covid-19 pandemic. 
 
The HS2 project in particular has begun connecting small companies, large companies and investors to help increase economic benefits and sustainability, by embedding circular economy principles and digitally enhancing productivity in HS2 itself and the wider projects planned around the railway.  

One of the West Midlands’ main advantages is its combination of attractive scenery with affordable places to live and thriving urban centres that support both jobs and entertainment opportunities. As we finally enter into a new year, we should turn our attentions and endeavour to focus on these promising hubs, where industry and business are ready to be our remedy for 2020.

Image source: Business Leader, 2020.

The UK economy suffered a record slump in April, with GDP plunging by 20.4%, bringing the imminent threat of mass job losses (Express and Star, 2020). What is clear is that the scale of Covid-19 and the effects on the economy will be bigger than most businesses have seen in their lifetime. As a region, we must continue to fight the pandemic and the economic uncertainty ahead. Thousands of Midlands firms are in significant financial distress.

We now see the lockdown restrictions gradually easing and shops beginning to reopen, however, any prospect of a ‘V-shaped’ recovery remains unlikely, with many sectors continuing to operate at reduced capacity. Some firms, including those in our hospitality, leisure, and tourism industries, may remain closed for some time and will require flexible and open-ended government support to weather the economic storm. We recently heard in the news that Dudley Zoo is losing around £100,000 per week since the Coronavirus crisis forced it to close. The current crisis is also particularly critical for all cultural and creative sectors across the Midlands regions.

The economic impact of the Coronavirus pandemic will hit the Midlands harder than any other region and leave London the least affected, according to an assessment of the worst affected areas of the UK (The Guardian, 2020). Consultancy firm, KPMG said that an analysis of the likely impact this year on the UK’s regions showed that the closure of car plants and the mothballing of hundreds of factories connected to the automotive sector, means that the economy of the Midlands regions would shrink by 10.1%.

Over the coming months, further action will be needed to limit the long-term economic damage and kickstart a recovery, including closing gaps in government support and providing incentives to help stimulate consumer demand and business investment. Establishing air bridges between countries with low infection rates would provide a much-needed boost to key parts of the UK economy, particularly the Midlands.

Regions need rebalancing and levelling up. A big question is how might ‘levelling up’ be achieved? Spatial inequalities in public spending clearly exist and have done for decades. Within England, public spending per person varies across regions. London gets the most money at both local and general government levels. The Midlands regions need extra capital investment in businesses, infrastructure and research and development.

Another question that needs asking is whether the government will slash local government budgets, regional development funds and many other public services and benefits? We need to carefully watch individual-level metrics like employment, income, and wellbeing to determine whether the government is evening out inequalities.

Going forward, both the Job Retention Scheme and financing support programmes should remain agile and responsive to the evolving economic situation. This will leave us well placed to build an ambitious vision for our Midlands regional economic recovery, one that prioritises jobs, investment and tackling pre-crisis inequalities across our society.

So, in my view what is missing is our own ability to help ourselves as such a vital region. That is to say, allowing us to support and invest in our local businesses – we know them – we often understand, and we need them.

Forgive me then, for mentioning one of my own areas of interest: Regionally. We are addressing these issues and planning to repair the damaged financial investment process by adding into the financial plumbing, bringing together UK investors with regional businesses. The aim, ultimately, is to allow us all to be able to invest directly in our local companies and in our local economy.

Image source: Wikipedia.com

Express and Star (2020)- Economy Shrank by a Fifth in April as Lockdown Took Hold

The Guardian (2020)- How Coronavirus Spreads Through a Population and How we Can Beat It