West Midlands Economic Impact Monitor
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West Midlands Weekly Economic Impact Monitor Issue 32 Publication Date 30/10/20 The West Midlands Combined Authority and Research England/UKRI fund this monitor. This monitor aims to pull together information across regional partners to understand the impacts of Covid19 on the economy. Where possible it will utilise all forms of quantitative and qualitative intelligence. However, we urge caution in the use of the contents as this is an emerging situation. 1 Key Issues • Infections are surging in Europe and the USA. There are local and national lockdowns in various parts of Europe. A short, sharp firebreak has been introduced across Wales. In England infection rates are now rising across all age groups. In the West Midlands region Dudley and Staffordshire are due to enter Tier 2 restrictions, with Coventry and Stoke-on-Trent being the most recent entrants in this region to Tier 2. The UK has recorded its highest death toll since the first wave. • The Coronavirus Job Retention Scheme ends this week (on 31 October) to be replaced by the Job Support Scheme which will run from 1 November for six months. The aim is to protect viable jobs in businesses facing lower demand over the winter months. Employees must work at least 20% of their hours to qualify, with employers and Government sharing the wage bill. The scheme ensures employees earn a minimum of 73% of their normal wages. Where a business is required to close its premises due to national or local Coronavirus restrictions the Job Support Scheme will apply. • The WMCA 3 LEP area had 205,500 employments furloughed on 31 August. This was 11.3% of eligible employments for the scheme. The local authorities with the highest percentage of workers furloughed on 31 August were Solihull with 12.8% (12,600), followed by Stratford-on-Avon and Birmingham both with 12.4% (5,100 and 55,400, respectively). • Across the WMCA 3 LEP area there were 173,200 of the population eligible for the Self-Employment Income Support Scheme (SEISS). There were 119,100 claims made to 30 September, which equates to a values of £284.6m or on average nearly £2,500 per claim. The take-up rate for the WMCA 3 LEP area was 69%, above the UK average of 67%. • A Jobs, Jobs, Jobs report from the Resolution Foundation analyses how the labour market situation has evolved over the pandemic. It is largely based on an analysis of 6,061 adults aged 18-65 surveyed on 17-22 September. Key points include that previously furloughed 18-24 year olds, BAME workers and the low paid were most likely to have lost jobs; the employment effects of the crisis have hit London especially hard; and the self-employed are hard hit with more than half of self- employed workers receiving lower earnings than before the crisis. • There is little sign that workers are reallocating to less affected sectors of the economy. • The majority of the rise in unemployment is accounted for by lower than normal flows into work – highlighting the importance of looking at labour market flows and underscoring the difficulties facing those searching for work. 2 • Across sectors the availability of funding and finance to support investment required to adapt to the Covid crisis is an issue for some businesses. Many are concerned about potentially having to shut down in a new lockdown. • With regard to Brexit some companies report that they are still in ‘crisis management’ mode and so have not had the opportunity to properly consider preparations for the end of the Transition period. • Businesses are looking for support in handling redundancies from HR service providers. • On a positive note, there is a good pipeline of investment projects emerging in various sectors. There has also been an increase in enquiries from businesses looking to upskill their staff as they seek to adapt their businesses to new market opportunities and conditions. • In the West Midlands online job adverts increased from 73.6% (9 October) to 77.3% (16 October) of the 2019 average. This is above the national figures of 62.8% and 65.6% respectively for the two dates. • ONS Weekly Indicators show that for the West Midlands less than 1% of businesses have permanently ceased trading, 98.1% of businesses have been trading and 1.3% of businesses have temporarily closed or paused trading. 28.5% of responding West Midlands businesses reported that they were at no risk of insolvency. 49.6% of West Midlands businesses reported that they were at low risk and 8.3% at moderate risk of insolvency. • 20% of adults reported leaving the house to eat or drink at a restaurant, café, pub or bar this week (19% in a local lockdown area and 21% not in a local lockdown area). This is a decrease on last week (26%). 84% of adults said they often or always maintained social distancing; a slight increase from 82% the previous week. • 60% of adults travelled to work this week: a 5 percentage point decrease from the previous week. 25% of adults were working exclusively from home – the highest since the beginning of August. 3 Global, National and Regional Outlook Ben Brittain WM REDI Global Outlook Surging case numbers in Europe and United States are weighing heavily on business and investor sentiment. European and U.S. equity futures are trending lower once again on Wednesday, following declines in Asian stocks. Italy has introduced its strictest virus restrictions since the country ended a national lockdown in May. Similarly, Spain is also imposing new measures, including a curfew. Bulgaria's prime minister and Poland's president have both tested positive for Covid-19, while three staff and advisers close to U.S. Vice President Mike Pence have also tested positive for the virus. Software giant Microsoft's sales beat estimates but its stock slipped in extended trading showing that even tech giants are not escaping the reduced confidence. Oil prices dipped after a report indicated higher U.S. crude stockpiles. And to add to the gloomy global economic mood, there are mixed signals on China's economic recovery. France has sadly reported their highest Covid-19 death toll since the first wave of the coronavirus, underlining the ongoing challenge the continent faces in getting the virus under control. France is readying new measures, reportedly including a one-month lockdown. National Outlook The U.K has also experienced its highest death toll since the first wave of the pandemic in spring. U.K. Prime Minister Boris Johnson, is facing the challenge of his own lawmakers over restrictions. He is facing a revolt of more than 50 conservative MPs, mostly from red wall seats, who are demanding a clear route out of lockdown for northern parts of the country, most of which are in Tier 3 restrictions. The renewed and extended trade talks between the U.K. and the European Union are continuing, with little indication this week of how the negotiations have progressed. The U.K. however, has maintained that it remained hopeful that a deal can be struck. Fishing remains a significant barrier to a deal. A short, sharp firebreak has been introduced across Wales to help regain control of coronavirus. This means that a series of restrictive measures will be in place from 6pm Friday 23 October until 12:01am Monday 9 November 2020. 4 Regional Outlook The West Midlands has had its highest number of weekly coronavirus deaths for nearly four months. Covid-19 was involved in 49 deaths in the West Midlands in the seven days up to October 16 – the highest weekly figure since early July. Two more areas of the region has entered into Tier 2 restrictions. Staffordshire and Dudley are set to move to Tier 2 restrictions after reporting rising infection rates of Covid-19. Staffordshire council said the new measures are expected to come into force by the end of the week after the seven-day infection rate reached 239 people per 100,000 for the week up to Saturday. Infection rates Anne Green WM REDI Europe has seen a continuing increase in infection rate resurgence in infection rates which is continuing (see graph below showing the daily new confirmed Covid-19 cases per million people, 27 October 2020). Since 31 December 2019 and as of 27 October 2020, 43,598,033 cases of COVID-19 (in accordance with the applied case definitions and testing strategies in the affected countries) have been reported, including 1,160,995 deaths. In Europe: there are 8,786,209 cases; the five countries reporting most cases are Russia (1,547,774), France (1,165,278), France (1,165,278), United Kingdom (894,690) and Italy (542,789). Latest ONS infection survey data (23 October) states: • The number of infections continues to increase; an estimated 433,300 people (95% credible interval: 407,500 to 459,300) within the community population in England had the coronavirus (COVID-19) during the most recent week, from 10 to 16 October 2020, equating to around 1 in 130 people (95% credible interval: 1 in 130 to 1 in 120). • There has been growth in COVID-19 infection rates in all age groups over the past two weeks including those aged over 70 years (not evident previously in this latter group), with the current rates highest in older teenagers and young adults (as previously). • The highest COVID-19 infection rates continue to be seen in the North West, Yorkshire and the Humber, and the North East. • During the most recent week (10 to 16 October 2020), it is estimated that there were around 6.46 new COVID-19 infections for every 10,000 people per day (95% credible interval: 5.46 to 8.55) in the community population in England, equating to around 35,200 new cases per day (95% credible interval: 29,800 to 46,600).