Worst-hit cities to make fast recovery - but UK must 'think local to level up'

The UK cities and towns hardest hit by the economic fallout from the pandemic are likely to make the fastest recovery.

However, according to the latest PwC Demos Good Growth for Cities report, those cities and towns are still expected to be worse off than at the beginning of the pandemic compared to more resilient places.

Economies in hard-hit places such as Birmingham, Wolverhampton and Walsall have decreased by more than 11.7 per cent in 2020, yet are among those with the strongest projected GVA growth rates for 2021.

These place are predicted to recover more effectively than others in 2021, with growth rates of 4.8 per cent and higher.

Coventry is predicted to grow by 4.3 per cent GVA.

As the business sectors most impacted by restrictions reopen, the cities most negatively affected due to their sectoral mix will see faster recoveries.

However, 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.

The report highlights the deep seated challenges facing many of the worst hit towns and cities which in many cases are those traditionally vulnerable to volatile economic performance.

The Good Growth for Cities report calls for a doubling-down on efforts to address structural issues - such as improving local skills, encouraging new business development and addressing local environmental challenges.
Other key findings show Birmingham has one of the highest rates of workers on the UK Coronavirus Job Retention scheme.

Birmingham, Solihull and Stratford placed 8.9 per cent or more of their workforces 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.

Matthew Hammond (pictured), Midlands region leader and Birmingham senior partner, PwC said: “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.

“Our technology degree apprenticeships with the University of Birmingham, which is now in its third year, is just one of many examples of how we are breaking down barriers to support diversity and social mobility in the people we recruit to build exciting technology based careers with us.

“I am pleased to say, despite so much instability for young people in the midst of COVID-19 restrictions we welcomed a record 275 new joiners to our Midlands offices, including graduates, technology degree apprentices, business placement students and school leavers in our autumn intake last year.

“The report sets out a series of recommendations for leaders from across the region and local government, as well as the private and third sectors, as they plan their recovery strategies. 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.