At -1% the East Midlands economy shrinks the slowest in the UK following lockdown but pre-pandemic data also shows an earlier contraction

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A quarterly nowcast for the EM for the 3 months ended March 2020 which captures the start of lockdown, published by the Economic Statistic Centre of Excellence (‘ESCoE’), has estimated that the EM economy contracted by 1%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the EM first and suggests the regional economy has coped better with the pandemic relative to the other eleven ‘regions’ of the UK. Over the same period London fell by 2.2% with Northern Ireland’s 3.9% contraction the ‘worst’; the UK decline was 2%.

For the 12 months ended March 2020 on a rolling 4 quarter basis, ESCoE has estimated that EM growth has dropped from 0.1% to -0.6%.

This ranked the EM last (previous ranking also twelfth) and suggests the region has not improved its position relative to the other eleven parts of the UK although the gap has narrowed. Over the same period UK growth was 0.5%; growth in London (ranked first) was 1.8%; and growth in Wales (ranked eleventh) was -0.5%.

ONS GDP to September 2019

Official ONS figures for an earlier period which reflects Brexit uncertainty rather than Covid 19 turmoil, show the region’s relative dip compared with other parts of the UK.  Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its fourth estimate for the EM, the other eight English regions, and Wales.  GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before ESCoE’s estimates shown above and compare GDP in the quarter ended September 2019 with the same quarter a year earlier. These showed the EM grew by 0.7%, down from 1.9% the previous quarter. This placed the EM sixth (previous ranking fourth) out of the twelve UK ‘regions’.

London topped the table with growth of 5% whilst UK growth over the same period was 1.2%. The West Midlands was the worst performer and contracted by 1.5%, one of three ‘regions’ in the UK to suffer a decline.

In the same report, the ONS’s figures also highlighted that the standalone quarter to September 2019 was poor for the EM and much worse than the previous quarter. The EM economy fell by 0.3% in July to September 2019, following growth of 0.6% in April to June 2019.

This placed the EM last (previous ranking second) out of the twelve UK ‘regions’. The EM was one of four regions of the UK that saw their economies contract but overall the UK grew by 0.5%.

Again London was top with quarterly growth of 1.4% whilst the North West, South East and Northern Ireland all contracted by 0.2%.

In this period, the EM’s best sector was arts/entertainment/recreation with growth of 6.9% but professional/scientific/technical activities fell by 4.6%. Overall services grew by 0.1% and construction by 0.6% but production fell by 2.2% and agriculture by 0.2%.

Labour

More largely pre-pandemic data from the ONS showed unemployment in the region was 4,000 higher at 94,000 between January and March; the uplift of 0.2% took the rate to 3.8%. At 5.4% the North East was the highest; Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.9%.

The South East had the highest employment rate at 80.2% which compared with 78.2% in the EM where 2.4m are employed; the UK rate was 76.6%.

Housing

The EM’s average property price decreased over the month by 0.4% to £194,664. The drop took the annual increase to 2.1%. In comparison, UK prices dropped by 0.2% to £231,855 during March, also an annual growth rate of 2.1%.

The ONS data is based on completed housing transactions. Typically, a house purchase can take 6 to 8 weeks to reach completion so the price data in the March figures will therefore reflect those completions that occurred before lockdown.

Given the closure of the housing market following lockdown the ONS has suspended its index until further notice.

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