Revealed: which East Midlands cities will bounce back from the pandemic quickest

A new report has highlighted which cities it thinks will emerge from the Covid-19 pandemic stronger.

Analysis in the latest PwC-Demos Good Growth for Cities report shows that the UK cities and towns hardest hit by the economic fallout from the pandemic are likely to make the fastest recovery, but are expected to be worse off than at the beginning of the pandemic compared to more resilient places.

Cities hit hard during the pandemic, such as Nottingham and Derby, have seen their economies decrease by 11.2% and 11.7% respectively in 2020, yet are among those with the strongest GVA growth rates for 2021. These cities are predicted to recover faster than others in 2021, with growth rates of 4.9% and higher.

As the business sectors most impacted by restrictions reopen, the cities most negatively affected due to their sectoral mix will see faster recoveries. However, the report says a return to pre-pandemic conditions will not necessarily instigate a dramatic upturn in economic activity and these city economies will still be smaller in 2021 than they were in 2019.

Despite the economic decreases in the economies in Derby and Nottingham, other key findings show Derby has one of the lowest rates of workers on the UK Coronavirus Job Retention scheme, placing only 6.4% of its workforce on the scheme during 2020. Nottingham has the lowest increase in the take-up rate of Universal Credit at 2.6% between January – November 2020 compared with Birmingham which has the third highest increase since January 2020 at 4%.

Ali Breadon, East Midlands market senior partner and Midlands government and health industries leader at PwC, 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.”

Breadon says that Leicester is expected to suffer more economically in comparison to other cities in the Midlands, with a growth rate of -12.2% in 2020 compared with other cities such as Derby at -11.7%. The high infection rate in the early parts of the summer has caused Leicester’s economic activity to stagnate over this period. But as we’ve seen in this year’s Good Growth for Cities Index, Leicester has performed well on health, work life balance, owner occupation, income distribution and the environment measures.

She added: “The pandemic has led to people living their life much closer to home and the likelihood is some of these lifestyle changes will stay for the medium-term. 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 livability and community, and where ‘price of success’ factors, such as housing affordability, are less of an issue.”

The Demos-PwC Good Growth for Cities Index ranks 42 of the UK’s largest 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 a city’s sectoral make-up, the impact of the use of the furlough scheme to protect jobs, and rates of Universal Credit claims, Covid infection and mobility rates to project GVA growth rates for 2020 and 2021.

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