NW could lose six years of economic growth due to pandemic, research claims
Research by small business lender, iwoca, claims that that the North West could lose up to six years worth of growth due to the financial hit created by the COVID-19 pandemic.
The region has been forecast to lose 11.2% of GVA in 2020, and analysis of the North West’s GDP statistics from previous years suggests that this fall would erase the region’s economic growth made between 2012 and 2018.
London, by comparison, is estimated to lose four years of growth due to the pandemic’s impact on the economy.
Businesses in the North West could also be more vulnerable to the adverse effects of the Covid-19 crisis, research claims.
The Office for National Statistics identified the two sectors of ‘Accommodation and food services’ and ‘Arts, entertainment, recreation and other services’ as being the two worst affected by the pandemic between January and July, and these are sectors likely to be greatly impacted by further local lockdowns.
Iwoca research has found that 12.8% of all businesses in the North West fall within these sectors – one of the highest proportions out of all the English regions – suggesting that the region’s business community may be one of the hardest hit in the country.
According to the most recent data from HMRC, these sectors have seen the highest proportion of jobs furloughed.
In the arts, entertainment and recreation sector, 45% of employees were on the furlough scheme at the end of July, and 43% of workers in accommodation and food services were furloughed.
This higher vulnerability could compound the economic effects of additional restrictions which the Government has outlined for towns and cities in the North West.
Iwoca has pledged to lend £220m to small businesses in the North by the end of 2023 to help them recover from the crisis.
This commitment comes on the back of a £100m pledge for small businesses in the North made by iwoca in 2018, which was achieved almost a year ahead of schedule.
Over the past two years iwoca has funded nearly 3,000 small business customers in the North. As the Government champions a levelling up agenda, iwoca says its pledge will help small businesses across the North grow and contribute to the UK’s economic recovery.
Alexander Alfieri, founder of Altrincham-based online antique jewellery retailer, Butter Lane Antiques, and an iwoca CBILS customer, said: “We were in such a good phase of growth pre-pandemic.
“As a business we took five steps forward and then this happened and left us six steps back. But it’s just the nature of running a small business. It wasn’t all doom and gloom at all, but it was tough, and there were some really squeaky moments.
“We ducked and dived, got our heads back on, and started thinking of different ways to get things back on track, which – through social media – we did.
“There were some really positive adaptations that came out of it – our podcast was born, and I had to become incredibly more specific with the stock we were buying and the manner in which we were selling it.”
Christoph Rieche, chief executive and co-founder of iwoca, said: “Small businesses around the country have been hit hard by the pandemic, but it’s clear that some parts of the country – including the North West – are particularly suffering.”