West Midlands one of biggest victims of Covid-19 lockdown

The West Midlands has been one of the hardest hit by the coronavirus lockdown, with GVA estimated to be falling in the region by 40% or £245m a day.

According to UK Powerhouse, a report by Irwin Mitchell and the Centre for Economic and Business Research (Cebr), as one of the major centres for manufacturing in the UK, the West Midlands is more vulnerable than others to a significant fall in demand for products in this sector.

Manufacturing loss in the region accounts for just under a third of the total GVA lost, at £81m per day.

The West Midlands also has a relatively small professional service economy with financial and insurance activities accounting for 6% of the total share of pre-COVID GVA, compared to London where it accounts for 13%.

This lower proportion of professional service infrastructure means the region’s ability to work from home during lockdown has been more limited and hence there is a significant impact on the total GVA lost per day.

Despite claiming that the UK economy is losing £2.7bn a day in absolute terms, the report says some sectors such as agricultural, forestry and fishing, along with the information and communication sector, have remained strong with a relatively low daily GVA fall of 14% and 2% respectively.

It adds that a national 1.3% rise in the share of the workforce mainly working from home over the past five years puts the UK economy in a more resilient position in terms of share of people able to work remotely.

Up just 0.9% in the same period, the West Midlands is not as far along as other regions but lockdown could lead to a sea change in to business attitudes to remote working.

Chris Rawstron, partner and head of business legal services at Irwin Mitchell in Birmingham, said: “In absolute terms, the West Midlands does not fare as badly as some other regions but relatively speaking, it is likely to be one of the regions with the highest daily GVA falls. While manufacturing has been hit hard, other sectors are holding their own in difficult circumstances.

“As we all move to a ‘new normal’ post lockdown, different regions are going to come out of this at their own pace and tailored support in key areas could prove vital to economic recovery.

“The last election saw talk of ‘levelling up’ the economy and a challenging task has undoubtedly become harder given the impact of coronavirus. Construction and manufacturing are key areas but the crisis has also highlighted the importance of remote working to business viability.

“The shutdown to halt the spread of Covid-19 is having a dramatic effect on the whole of the UK economy and certain regions are expected to weather the storm better than others. The report offers an insight into what form regional support might need to look like in the West Midlands once we start down the road to economic recovery.”