North West economy faces huge virus impact, but will bounce back in 2021

Warren Middleton

Business advisers have predicted that GVA in the North West is expected to shrink by 9.5% in 2020 – but the region is expected to bounce back in 2021.

GVA is the measure of the value of goods and services produced in an area, industry or sector of an economy.

According to new analysis by KPMG’s economics team, the North West was identified to be among the top four regions to be most affected economically by the outbreak of coronavirus – behind the West and East Midlands, and the East of England.

By comparison, London’s economy is only expected to shrink by 7.3% – the lowest figure of any region.

With a relatively higher share of services that are less impacted by COVID-19, it is more resilient to the restrictions imposed by lockdown.

The analysis indicates that all regional economies will stage a recovery in 2021, delivering GVA growth greater than any losses this year.

Based on current forecasts, growth in the North West next year is expected to be 10.6%.

Warren Middleton, office senior partner at KPMG in Manchester, said: “In the short term, our analysis highlights how the Government’s ambition to ‘level-up’ the UK will face a setback as a result of the pandemic.

“We expect that the gap between performance in London and the rest of the UK will widen this year.

“While the North West is home to a number of traditional and heavily-impacted industries, including manufacturing and construction, it’s clear that we have strength in depth in less exposed sectors, such as professional services, healthcare and digital.”

He added: “These businesses will ultimately boost resilience in the region and drive any economic recovery as working conditions improve, slowly, but surely.”

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