West Midlands cities hardest hit by pandemic will recover faster – but will still be worse off than before

The West Midlands cities hardest hit by the Covid-19 pandemic are predicted to see some of the fastest growth rates in 2021 – but will still be worse off than prior to the pandemic, a new report has found.

New analysis in the latest PwC-Demos Good Growth for Cities report revealed that locations such as Birmingham, Wolverhampton and Walsall saw their economies decrease by more than 11.7 per cent in 2020, yet they are predicted to recover more effectively that others in 2021 with growth rates of 4.8 per cent and higher.

That said, 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.

Other key findings show Birmingham has one of the highest rates of workers on the job retention scheme, with the city, Solihull and Stratford-upon-Avon all placing 8.9 per cent or more of its workforce on the scheme during 2020.

Birmingham also has the highest take-up rate of Universal Credit, with 8.8 per cent of its population aged 16 to 64 claiming benefits in November 2020 compared to 4.8 per cent claiming benefits in January 2020.

The report suggests that West Midlands cities need to “learn and embed” lessons from cities such as Oxford, Leicester, Leeds and Edinburgh which have performed more strongly in areas including jobs, health and skills, to drive “more balanced and sustainable economic growth”.

Matthew Hammond, Midlands region leader and Birmingham senior partner at PwC, said: “As a whole, cities in the 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, jobs, income and work-life balance, as well as the region suffering with high unemployment rates and a strong reliance by local businesses on the UK Coronavirus Job Retention scheme.

“Cities that have the highest proportion of younger people, such as Birmingham, Nottingham and Leicester, are likely to face challenges in finding the right employment opportunities for young people.

“Young workers are therefore entering the labour force in one of the toughest economic environments which will exacerbate unemployment rates, make employment opportunities even more competitive and potentially undermine social mobility efforts.

“To counter this, local leaders must look to invest in the skills needs of the region to support the next generation into the workforce.”

Mr Hammond added: “The pandemic has also 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 more quickly. 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.

“Taking a broad approach to economic wellbeing and building resilience will be essential to create liveable vibrant places where people want to live, work and visit.

“The regions’ significant growth over the past five years and long-term growth ambitions and investments in HS2, Coventry City of Culture and the Birmingham 2022 Commonwealth Games will also encourage strong conditions for a recovery.”

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The Demos-PwC Good Growth for Cities Index ranks 42 of the UK’s largest cities based on the public’s assessment of ten key economic wellbeing factors.

PwC’s 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.