Greater Birmingham Chambers of Commerce
This blog post was produced for inclusion in the Birmingham Economic Review for 2020.
The annual Birmingham Economic Review is produced by the University of Birmingham’s City-REDI and the Greater Birmingham Chambers of Commerce, with contributions from the West Midlands Growth Company. It is an in-depth exploration of the economy of England’s second city and a high-quality resource for informing research, policy and investment decisions.
This post is featured in Chapter 1 of the Birmingham Economic Review for 2020, on Birmingham’s Economic Outlook Before and After the COVID-19 Pandemic.
Click here to read the Review.
As the longest running business survey of its kind in the region, the Greater Birmingham Quarterly Business Report and the various iterations which proceeded it, have offered a comprehensive snapshot of the health of the regional economy for over thirty years. Never in that period had we seen such a drastic drop in economic demand home and abroad as we did earlier in the year when the Government grappled to overcome the most unprecedented crisis witnessed in a generation.
With much of the UK economy undergoing a period of enforced stasis, it was no surprise to see a dramatic fall in domestic and export sales, along with a drop in both levels of recruitment and investment in capex and training. Business optimism was clearly dented and systemic issues which had long impacted the output of the regional economy (problems related to cash flow for example) had become further entrenched by the fallout from Covid-19. Historical analysis also revealed the drop in local output was far more acute then the levels recorded during the depths of the global financial crisis, which potentially point to the long term challenges local and national stakeholders will face in attempting to engineer a revival for the region as a whole.
The data we’ve collected from hundreds of businesses across Greater Birmingham for the latest version of the report highlight trends which are reassuring and concerning in equal measures. It’s pleasing to see an upturn in domestic and international sales, a nominal increase in hiring levels and a noticeable improvement in turnover and profitability projections. However, investment levels remain understandably sluggish and the majority of businesses are still not operating at full capacity.
The results are expected and broadly in line with national trends as the ONS revealed that the economy grew by 6.6% in July as lockdown measures began to ease and the Chancellor introduced measures such as Eat Out to Help Out which offered a welcome short term boost to consumer spending. Nevertheless, the monthly GDP figure for July was 11.7% lower than the pre-pandemic levels seen in February prior to the start of the crisis and the data we collected for the latest report also revealed that the increase in activity amongst local businesses is still someway short of the levels we were accustomed to prior to the advent of Coronavirus.
As Government support measures such as the Job Retention Scheme begin to wind up in the autumn, the challenge for policymakers in Westminster will be to ensure that the foundations are in place for a sustainable recovery which incorporates inclusive economic growth at the heart of its policy programme. Offering local and regional authorities greater funding and flexibility to support the most affected firms along with maximising the vast opportunities that game changing projects and events such as HS2 and the Commonwealth Games need to be front and centre of any local economic plan.
Pressing ahead with structural reform to outmoded methods of fiscal revenue collection related to business rates and National Insurance contributions will help to alleviate the crippling cost pressures that businesses have faced for years and allow them to invest in their people and products at a time when its never been more important. If anything, the situation is primed for Government to demonstrate its commitment to ‘building back better’ and once and for all, tackle the long term issues within our economy which have hampered our output for decades.
Senior policy and patron adviser
Greater Birmingham Chambers of Commerce