The State of Britain

WM

The regional economy shrinks by 6.8% following lockdown and data for an earlier period also shows a Brexit contraction but the Job Retention Scheme helps push regional unemployment down

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A nowcast for the WM for the 12 months ended June 2020 on a rolling 4 quarter basis, published by the Economic Statistic Centre of Excellence (‘ESCoE’), has estimated that the WM economy contracted by 6.8%.

This ranked the WM tenth in the UK and suggests the regional economy has so far coped ‘poorer’ with the pandemic relative to the other eleven UK ‘regions’. Over the same period the East Midlands was ‘best’ with a fall of 4.5%, with London’s 7.4% contraction the ‘worst’; the UK decline according to the Office for National Statistics (‘ONS’) figures was 5.3%.

ESCoE is a partnership of research institutions and the ONS and has highlighted that during these unprecedented times, there is no historical data that their model can use to fully understand how the pandemic will impact regional economies. Consequently the partnership emphasises the uncertainties that exist with their nowcast at this time.

ONS GDP to December 2019

Official ONS figures for an earlier period which reflects Brexit uncertainty rather than Covid 19 turmoil, show the region performed poorly relative to 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 fifth estimate for the WM, 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 December 2019 with the same quarter a year earlier. These showed the WM contracted by 2.7%, a deterioration on -1.7% the previous quarter. This placed the WM last (previous ranking also last) out of the twelve UK ‘regions’.

London topped the table with growth of 5% whilst UK growth over the same period was 0.9%. The West Midlands was again the worst performer with the North East, Wales, East Midlands and the North West the other ‘regions’ in the UK to suffer a decline.

In the same report, the ONS’s figures highlighted that the standalone quarter to December 2019 also showed a worsening picture in the WM with the data poorer than the previous quarter. The WM economy contracted by 0.6% in October to December 2019, following +0.2% in July to September 2019.

This placed WM eighth (previous ranking also eighth) out of the twelve UK ‘regions. The WM was one of seven regions of the UK that saw their economies contract but overall UK growth was flat.

The South West was top with quarterly growth of 0.8% whilst the North East was bottom, posting a drop of 1.3%.

In this period, the WM’s best sector was electricity with growth of 4.5% but mining fell by 8.3%. Overall production was -2.9%, construction -2.9%, services 0.1% and agriculture 0.4%.

Labour

Data from the ONS showed the Job Retention Scheme continued to depress unemployment across the UK. Unemployment in the region was 18,000 lower at 130,000 between April and June; the drop of 0.6% took the rate to 4.4%. At 5.2% the North East was the highest; Northern Ireland had the lowest rate of 2.5%, with the UK rate at 3.9%.

The South East had the highest employment rate at 79.7%, this compared with 71.7% in Northern Ireland and 75% in the WM where 2.8m are employed; the UK rate was 76.4%.

Housing

The WM’s average property price increased by 0.4% in April 2020 to £202,093. The uplift took the annual increase to 3.4%. In comparison, UK prices dropped by 0.2% to £234,612 during April, an annual growth rate of 2.6%.

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 April figures will therefore reflect those completions that occurred before lockdown.

This is the first publication of the UK HPI since it was suspended in May 2020. The UK Property Transactions Statistics for April 2020 showed that that between March 2020 and April 2020, transactions decreased by 55.5%.

Regional inequality flagged by Solihull and Sandwell, weak growth in Telford and pandemic related job losses mount up

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Administrations and job losses in the region are on the increase as the effects of the pandemic on businesses solidify.

Lee Longlands, a historic Midlands furniture company which was established in 1902 has gone into administration. Its shops in Birmingham, Leamington Spa, Kidderminster, Abingdon, Derby and Cheltenham were closed for three months and have only just re-opened as lockdown restrictions eased.

Up to 80 jobs could be cut at pie manufacturer Wrights. The Crewe based firm started making pies in 1926 but now supplies savoury goods and other products to businesses such as restaurants and bakers. Many of its clients in airline catering and hospitality have either closed or are working at reduced capacity due to the impact of coronavirus. Wrights hopes to avoid compulsory redundancies and has started a 30-day consultation.

Coventry-based car-maker Jaguar Land Rover is set to cut the number of contract-agency workers its employs, following a sales drop. The car-maker has plants across the UK, including Castle Bromwich, Solihull, and Halewood; up to 1,100 temporary roles are at risk.

The Stats

This month the ONS published regional household disposal income figures for 2018. Total gross disposable household income (GDHI) in the UK in 2018 was £1.4bn. Of that, 86.3% was in England, 7.6% was in Scotland, 3.8% was in Wales and 2.3% was in Northern Ireland.

The average UK income per head after direct and indirect taxes were taken off was £21,109.  England was the only country above the UK average at £21,609 but growth in incomes was best in Scotland and Northern Ireland at 5.1% and 4.7%. England’s growth was the same as the UK at 4.6%; Wales grew by 4.4%.

Regionally London had the highest GDHI per head where, on average, each person had £29,362 available to spend or save; the North East had the lowest at £16,995 which compares with a UK average of £21,109. The WM was £18,222.

At a local level, Kensington and Chelsea and Hammersmith and Fulham district had the highest GDHI per head at £63,286 with Nottingham the lowest at £13,138. All the top 10 local areas were in London or the South East with the bottom 10 within the North West, Yorkshire and The Humber, East Midlands, West Midlands, and Northern Ireland regions.

The wealthiest part of the WM was Solihull with incomes of £24,146. This ranked the area 29th out of 179 districts of the UK.

The poorest area of the region was Sandwell at £14,407, beating Birmingham at £15,281. Sandwell was ranked 175th in the UK, Nottingham and Leicester were bottom.

In terms of regional growth, the largest increase was in London at 5.2% with the smallest in the East Midlands at 3.6%. WM growth was 4.7%.

At the local level, Kensington & Chelsea and Hammersmith & Fulham was best again in the UK with growth of 7.6% whereas Luton was the worst and only grew by 0.9%.

In the WM, income growth in Solihull was top at 6.1% with Stoke second at 5.9%. Telford was the worst regional performer with growth of 2.0%, a ranking of 174th.

Labour

More data from the ONS showed unemployment in the region was 7,000 higher at 141,000 between February and April; the uplift of 0.3% took the rate to 4.8%. This narrowed the gap with the North East at 5.2% which was still the highest; Northern Ireland had the lowest rate of 2.3%, with the UK rate at 3.9%.

The South East had the highest employment rate at 79.5% which compared with 74.5% in the WM where 2.8m are employed; the UK rate was 76.4%.

Public sector employment in the WM increased by 1.5% in March to 444.000, which was 16.2% of the workforce. At 25.2% Northern Ireland had the highest level of public sector employment which compared to 13.9% in London which was the lowest.

In March, average earnings in the WM fell by £9 to £586 per week. London had the highest average earnings of £847 and the lowest average earnings of £537 were recorded in Northern Ireland.

Earnings in the NE increased the most in the UK by £60 per week whereas the biggest drop in wages was £37 in Scotland.

In the UK overall, average earnings grew by 1.7% or by 0.4% after inflation. If bonuses are included real pay fell by 0.4%.

The public sector saw the highest estimated growth, at 3.2% for regular pay, while negative growth was seen in the construction sector, estimated at negative 1.8%. Both the wholesaling, retailing, hotels and restaurants sector and the manufacturing sector saw very weak growth at 0.1% for regular pay.

Housing

Estimates of private sector rents for the year to March 2020 were published by the ONS this month.

The median monthly rent was an all time high of £700 in England between 1 April 2019 and 31 March 2020. London had the highest median monthly rent at £1,425 with the North East the lowest at £495. Within local authorities the difference in monthly rental price between the most and least expensive was nearly £2,100.

In the WM rental prices ranged from £525 to £750 with £645 the median.

Data for the 12 months to May 2020 showed private rental prices paid by tenants in the UK rose by 1.5%, unchanged from the previous month. Rental prices grew by 1.5% in England, 1.2% in Wales and 0.6% in Scotland.

Rental prices increased the most in the South West, up by 2.5%, with the lowest price growth in the North East at 0.8%, the WM recorded 2.2%.

According to the ONS the South West is also projected to have the highest regional rate of growth in households over the next ten years, at 9%. This compares with 7.7% in the WM and 4.3% in the NE (the lowest).

Overall the number of households in England is projected to increase by 1.6m (7.1%) from 23.2m in 2018 to 24.8m in 2028. The WM is forecast to have 2.6m households by 2028.

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

The West Midlands economy shrinks by 1.9% following lockdown and pre-pandemic data also shows an earlier contraction

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A quarterly nowcast for the WM 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 WM economy contracted by 1.9%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the WM seventh and suggests the regional economy has so far coped averagely with the pandemic relative to the other eleven ‘regions’ of the UK. Over the same period the East Midlands was ‘best’ with a fall of 1% 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 WM growth has dropped from 0.8% to -0.2%.

This ranked the WM ninth (previous ranking also ninth) 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 the East Midlands (ranked twelfth) was -0.6%.

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 WM, 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 WM contracted by 1.5%, a slight improvement on -1.7% the previous quarter. This placed the WM last (previous ranking also twelfth) 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 North West was the second worst performer and contracted by 1.3%, along with the East of England and the WM, these were the 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 showed an improving picture in the WM with the data better than the previous quarter. The WM economy grew by 0.6% in July to September 2019, following -1.6% in April to June 2019.

This placed the WM sixth (previous ranking last) out of the twelve UK ‘regions’. 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% with the East Midlands posting a drop of 0.3%.

In this period, the WM’s best sector was information/communications with growth of 10% but other services fell by 4.1%. Overall services grew by 0.6%, production by 1% and agriculture by 0.1% but construction fell by 0.6%.

Labour

More largely pre-pandemic data from the ONS showed unemployment in the region was 17,000 higher at 149,000 between January and March; the uplift of 0.6% took the rate to 5%. 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 75% in the WM where 2.8m are employed; the UK rate was 76.6%.

Housing

The WM’s average property price decreased over the month by 2.3% to £195.917. The drop took the annual increase to 0.4%. In comparison, UK prices dropped by 0.2% to £231,855 during March, 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.

Scottish exports overtake the WM, the regional construction sector declines and the WM unemployment rate only beats the NE

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HMRC has published the latest regional trade figures which show exports and imports for 2019. Given the time period this data reflects Brexit uncertainty rather than Covid 19 turmoil. 

In the year to December 2019, the overall value of UK trade in goods exports increased by 2.1% to £346bn compared with the same period in 2018. The overall value of imports increased by 0.3% to £483bn.

There was a decrease in the annual export value in the WM along with five of the 12 UK ‘regions’. The WM’s exports decreased by 5.5% or £1.8bn to £32bn which was 9% of the UK total.  The fall meant that Scotland moved past the WM to third in the UK rankings.

The leading regional exporter was the SE of England at £46.5bn with Northern Ireland the smallest at £9bn. The best performer in percentage terms was London which added 17% compared with Yorkshire & the Humber which dropped by 6%.

There was a decrease in the annual import value in the WM along with five of the 12 UK ‘regions’. The WM’s imports decreased by 3.7% or 1.4bn to £36bn which was 8% of the UK total.

The largest regional importer was the SE at £98bn and Northern Ireland was the smallest at £8bn. In percentage terms London added 12% compared with Scotland which reduced imports by 7%.

The USA was the WM’s largest export market with machinery & transport equipment the best export. Most of the WM’s imported goods came from Germany with machinery and transport equipment the biggest import.

Services

This month the ONS published data on regional services imports for 2017. The biggest component of services imported into the UK was £51bn of travel. This was 28% of the £181bn UK total imports of services.

The WM’s imported £11bn of services value in 2017 of which £4bn was travel. The largest importer of services was London at £60bn with Northern Ireland importing £1.6bn.

At a local level, the biggest importer of non-travel services into the UK was Camden and City of London at £14.5bn, almost double the next largest importer which was Westminster at £7.9bn. Of the 167 local areas, The Western Isles of Scotland imported the least amount, £21m, with Anglesey next at £31m.

In the WM, Birmingham imported £1.5bn of non-travel services compared with £147m in Shropshire.

The data on services exports was released by the ONS last year which showed the WM’s exporting £11.5bn of services which compared with London at £117bn and Northern Ireland at £2.9bn.

Other data

The ONS has also published the latest regional construction sector data to December 2019 which again reflects Brexit uncertainty rather than Covid 19 turmoil. Compared with the previous quarter all parts of the UK recorded a decline with the WM’s posting a 4.6% drop to £4bn, the biggest decrease in the UK; the SE was best with a 0.9% fall. Within this though 4910 new houses were completed in the WM, an increase of 11% on the previous quarter.

More pre-pandemic data from the ONS showed unemployment in the region was 15,000 higher at 142,000 between December and February; the uplift of 0.5% took the rate to 4.8%, the second worst in the UK. Northern Ireland had the lowest rate of 2.5%, the NE the highest at 5.6% with the UK rate at 4%.

The South East had the highest employment rate at 80.1% which compared with 75.3% in the WM’s where 2.8m are employed; the UK rate was 76.6%.

The WM’s average property price decreased over the month by 1.3% to £198,658. The drop took the annual increase to 0.7%. In comparison, UK prices dropped by 0.6% to £230,332 during February, an annual growth rate of 1.1%.

The wealthiest area of the WM was the Priorslee area of Telford, the poorest was the Aston University area of Birmingham, and Coventry and Warwickshire LEP has the best productivity growth in the UK

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The ONS has published average household disposal income estimates for England and Wales in 2018. The incomes stated are after tax and housing costs are taken off. 

The analysis shows that 87% of local areas had an average household income of between £22,500 and £39,200; within this over a third were between £28,000 and £33,600.

Of the 50 areas with the highest total incomes, 41 were in London with the lowest incomes more widely spread geographically across England and Wales. The North East, East England, London, and the South East had no local areas in the bottom 50.

The wealthiest area in England and Wales was Mickleover in Derby, with incomes of £52,200 and the poorest was Highfield North in Leicester with £12,500. The two areas are 30 miles from each other and ranked 7200 places apart.

The wealthiest area of the WM was the Priorslee area of Telford at £39.500. This ranked the area 205th out of the 7,201 areas recorded. The poorest area of the region was the Aston University area of Birmingham with £12,900. This area was ranked 7,200 out of the 7,201 areas of recorded, the second poorest in England and Wales.

Like most regions of the UK, output per hour in the WM is below the UK average. Productivity per hour in the region was 10.4% below the UK average which ranked the region seventh nationally for 2018. One reason for this is the high levels of hours worked and high productivity in London and South East which pulls up the UK average so much that all other regions fall below it.

The ONS has now released data for a longer period and at a subregional level. This gives further insight into the WM’s performance.

Perhaps the most useful indicator is the 2018 results for the 44 enterprise regions in the UK which comprise the 38 English local enterprise partnerships (LEPs) and six enterprise regions in Scotland, Wales and the border regions.

Thames Valley Berkshire LEP had the best productivity (in terms of hours and jobs) in 2018 at 35% above the UK average whereas the Black Country LEP at 24% below was the worst.

At 4% above, the Coventry and Warwickshire LEP was one of eight economic regions which beat the UK average and was ranked 7th, all of the WM’s other LEPs recorded productivity below the UK average.

Greater Birmingham and Solihull was 16th at 5% below, the rest all performed poorly and ranged from 19% to 24% below the UK average. Worcestershire, Stoke on Trent/Staffordshire and the Marches were ranked 38th, 39th and 40th. As mentioned above, the Black Country LEP at 24% below was ranked 44th, the worst in the UK.

In terms of productivity growth, however, between 2010 and 2018 the Coventry and Warwickshire LEP was top with growth of 16%. Twelve economic regions recorded productivity levels lower in 2018 than 2010. The worst performer was the Buckinghamshire Thames Valley LEP which saw productivity drop by 11%.

The WM’s results for productivity growth were better.

As mentioned above, with growth of 16% the Coventry and Warwickshire LEP was the best in the UK. The Black Country LEP was ranked 7th nationally with growth of 6%, beating the Marches which was ranked 13th with 4% growth.

Greater Birmingham and Solihull was 20th at 3%, Worcestershire 25th at 2% with Stoke on Trent and Staffordshire at 0%, meaning that none of the region’s LEPs recorded productivity levels lower in 2018 than 2010.

Despite this, all of the WM’s three subregions recorded productivity below the UK average. The West Midlands -7%, Herefordshire, Worcestershire and Warwickshire -8% and Shropshire and Staffordshire and the West Midlands -18%.

At a county level, with the exception of Solihull (+39%) and Warwickshire (+7%) all of the WM’s districts recorded productivity below the UK average. Herefordshire had the lowest productivity, 33% below the UK average.

The growth in hours worked between 2010 and 2018 in Herefordshire, Worcestershire and Warwickshire was 16%, beating Shropshire and Staffordshire and the West Midlands which each recorded 12%. In UK terms this level of growth was in the top fifteen of the country’s 40 subregions.

If the increase in economic output is also factored in, then the sub regional performances are also good, mirroring the region’s LEPs. Herefordshire, Worcestershire and Warwickshire was ranked 3rd in the UK with growth of 11%, the West Midlands was placed 6th with 9% and Shropshire and Staffordshire 22nd with 2%. 

More data from the ONS showed unemployment in the region was 1,000 higher at 133,000 between November and January; the slight uplift left the overall rate unchanged at 4.5%, the third highest in the UK. Northern Ireland had the lowest rate of 2.4%; the North East was the highest with 6.2%, with the UK rate at 3.9%.

The South East had the highest employment rate at 80% which compared with 75.2% in the WM where 2.8m are employed; the UK rate was 76.5%.

The WM’s average property price increased by 0.4% to £200.628, which took the annual increase to 2.6%, the second highest in the UK. In comparison, UK prices decreased by 1.1% to £231,185 during January, an annual growth rate of 1.3%.

In Q2 2019 the WM economy reverses and plummets down the UK rankings but regional productivity grows above the UK average and WM earnings now ranked fifth

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For the 12 months ended December 2019, a nowcast published by the Economic Statistic Centre of Excellence (‘ESCoE’) on a rolling 4 quarter basis, has estimated that WM’s growth has dropped from 1% to 0.8%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the WM ninth (previous ranking also ninth) and suggests the region has maintained its position relative to the other eleven parts of the UK. Over the same period UK growth was 1.4%; growth in London (ranked first) was 3.3%; and growth in the East Midlands (ranked twelfth) was 0.1%.

The latest official ONS figures for an earlier period are much worse. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its third estimate for the WM 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 the ESCoE estimates shown above and compare GDP in the quarter ended June 2019 with the same quarter a year earlier. These more volatile figures showed the WM economy contracted by 0.6%, down from 2.3% growth the previous quarter. This placed the WM eleventh (previous ranking fourth) out of the twelve UK ‘regions.’

London topped the table with growth of 4.5% whilst UK growth over the same period was 1.4%. The NW was the worst performer and contracted by 0.7%, one of three ‘regions’ (including the WM) in the UK to suffer a decline.

In the same report, there was no surprise that the ONS’s figures also highlighted that the standalone quarter to June 2019 was also poorer for the region than the previous quarter. The WM economy contracted by 1.6% in April to June 2019, following growth of 0.2% in January to March 2019.

This placed the WM eleventh (previous ranking seventh) out of the twelve UK ‘regions. Six regions of the UK saw their economies contract as did the UK overall by 0.2%.

In this period, the WM’s finance sector grew 6.9% but human health/social work activities and administrative/support service activities fell by 3.4% and 4.8%.

In general all sectors in the region shrank, with production, construction, services and agriculture sectors all falling by 2.6%, 1.8%, 1.3% and 0.6% respectively. Despite falling this quarter, the WM has shown strong growth in the construction sector relative to 2017. Agriculture and services have remained relatively steady since 2017, and production has fallen since the beginning of 2018.

Productivity

Like most regions of the UK, output per hour in the WM was below the UK average in 2018 according to ONS figures. Productivity in the WM was 10.4% below average which ranked the region seventh in the UK.

Two regions had productivity above the UK average, London +31.6% and the South East +9.1%. These regions record high levels of hours worked and their high productivity pulls up the UK average so much that all other regions fall below it. Wales was furthest off the average at -17.2%.

The WM moved up the rankings slightly to sixth in terms of output per job. This means that on average workers in the WM worked longer hours for each job compared with the UK average. The region’s 10.9% below the UK average compared with London at 40.5% above.

In terms of growth in output per hour, six regions of the UK expanded. The WM was ranked fourth as output per hour grew by 1.6%. At 2.3% growth was fastest in Scotland and the biggest contraction was in Yorkshire and the Humber at 2.5%. UK growth was 0.5%.

Sectorally, productivity in accommodation/service activities was better than expected but transportation/storage disappointed.

On average, in 2018 the UK economy produced about £35 of value for each hour worked, with finance and insurance top at c£69 per hour compared with accommodation and service activities productivity at c£17 per hour.

Labour

More data from the ONS showed unemployment in the region increased by 11,000 to 131,000 between October and December; the uplift of 0.3% took the rate to 4.4%, the third highest in the UK. Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

The South West had the highest employment rate at 80.1% which compared with 75.5% in the WM, where 2.8m are employed; the UK rate was 76.5%.

In December, average earnings in the WM increased by £4 to £595 per week. London had the highest average earnings of £805 and the lowest average earnings of £530 were recorded in the NE. The WM was ranked fifth (previous ranking seventh).

In the UK overall, average earnings grew by 2.9% or by 1.4% after inflation. After adjusting for inflation, regular pay is now at its highest level since 2000, whereas total pay (which includes bonuses) is still 3.7% below its peak in February 2008.

Housing

The WM’s average property price decreased by 0.4% over the month to £201,343, the drop took the annual increase to 1.4%. In comparison, UK prices increased by 0.3% to £234,742 during September, an annual growth rate of 2.2%.

WM sees the biggest increase in state spending in the UK, the region’s house prices rise the fastest in England and the UK’s largest ‘regeneration project’ approved

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In the ONS’s estimate of regional public spending and regional tax revenues in 2019, the WM had a deficit of £14.9bn, a larger shortfall than the £12.9bn recorded in 2018. This compared with London, which had the highest surplus of £38.9bn.

On a per person basis, the WM’s deficit was £2,526, higher than the £2,209 recorded in 2018. London had the highest surplus of £4,369 per person whereas Northern Ireland had the biggest shortfall at £4,978.

The only areas of the UK to run surpluses were London, the SE of England and the East of England. The West Midlands and the North East were the two regions in the UK to increase their net fiscal deficits over the year; all the other regions reduced their shortfalls.

At a national level, the UK had a deficit of £623 per person which splits into deficits of £68, £2,713, £4,289 and £4,978 for England, Scotland, Wales and Northern Ireland respectively.

Public spending in the WM was £73.8bn or £12,503 per head, the increase on the 2018 figure of £69.4bn was the largest in the UK. London had the biggest spend of £123.9bn or £13,826 per head whereas Northern Ireland had the lowest at £27.9bn or £14,821 per head. Total government spending was £853bn or £12,835 per head.

The WM collected £58.8bn in taxes in 2019. London contributed the most to the Exchequer at £161.9bn, compared with the lowest contribution of £18.5bn which was from Northern Ireland. Overall the state raised £811.3bn or £12,213 per head in taxes an uplift of £34.1bn or £461 per head compared with 2018.

More data from the ONS showed unemployment in the WM increased by 11,000 to 128,000 between September and November 2019; the increase of 0.3% took the overall rate to 4.3%, the joint second highest in the UK. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%.

The South West had the highest employment rate at 79.8% which compared with 75.4% in the WM. UK employment was estimated at 76.3%.

WM average property prices increased the most in England during November 2019, the 1.7% uplift to £204,238, increased annual growth to 4.0%. In comparison, UK prices increased by 0.4% to £235,298 an annual growth rate of 2.2%.

On transport, the Office of Rail and Road (ORR) is investigating Network Rail over its poor service on routes used by commuter favourite West Midlands Railways. Network Rail owns and operates rail infrastructure in England, Wales and Scotland. The ORR said the proportion of scheduled train stops made on time in the last 12 months up to 4 January was 57%, this compares to the national average of 65%.

On HS2, the Department for Transport and HS2 Ltd did not allow for all uncertainties when estimating initial costs the National Audit Office (NAO) has said. In 2015, HS2 was due to cost £56bn but a leaked government report suggests the total could reach £106bn. At this cost the decision whether to proceed or not will be taken at Prime Ministerial level next month.

Work to extend the West Midlands tram network from Dudley to Wednesbury, incorporating 17 stops, has started. The Midland Metro, which currently connects Birmingham and Wolverhampton, is expected to carry passengers to Dudley and Brierley Hill by 2023.

The first phase of the project is to construct a £4.3m wall at Castle Hill. The tram extension in Birmingham opened from Grand Central station to the city’s library in December.

Plans for the UK’s biggest ‘regeneration project’ have been approved. The size of Birmingham’s Alexander Stadium for the 2022 Commonwealth Games will quadruple. Permanent capacity will increase to 18,000, with temporary seating taking it up to a limit of 40,000 spectators.

Birmingham was named as the host city for the games in December 2017, and it will be the UK’s costliest sporting event since London 2012. The 11-day games are budgeted at £778m, with £184m paid by Birmingham City Council and partners.

On infrastructure, funding for the Hereford bypass and southern link road has been withdrawn by the Marches LEP.  

The route of the £150m Hereford bypass and southern link road was approved in 2018, but a change in political control at the council led to possible alternatives being considered including building new bridges and a light railway on the Great Western Way.

As well as withdrawing the £27m the LEP is also seeking to claw back £3.8m already spent on the project.

The West Midlands jointly tops the 2018 growth league, Solihull the regional star, Walsall declines and the Birmingham LEP ranked 1st in the UK

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Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its 2018 full year estimate of economic activity by UK country, region and local area using gross domestic product.

The figures showed the WM economy grew by 2.0% in 2018, down from the 2017 growth rate of 2.6%. This placed WM second (2017 ranking also second) out of the twelve UK ‘regions.’

The UK and England growth rate in 2018 was 1.4%. Growth in Wales was 1.3%, Scotland grew by 0.9% and the Northern Ireland economy shrank by 0.5%.

London topped the 2018 table with growth of 2.0% whilst Northern Ireland was at the bottom.

Within the region, the Solihull economy grew the fastest at 6.7%, followed by Warwickshire at 3.2% and Stoke at 2.3%. Across the UK, the highest annual growth of the 179 local areas was in Falkirk at 10.5%.

Only one area of the region saw its GDP decline in 2018. This was Walsall at -8.0%. In UK terms, the lowest annual growth of subnational areas was in Mid and East Antrim at -10.1%.

GDP per head growth of 5.0% to £49,328 was seen in Solihull which was top in the region. Indeed Solihull, at ninth, was one of two areas outside of London and the SE to feature in the UK top 10. GDP per head fell by 9.6% in Walsall to £19,412.

In terms of UK extremes, GDP per head was £395,309 in Camden and the City of London and £15,034 in Ards and North Down. These figures are a guide and are influenced by commuter flows.

In 2018, key drivers of the WM economy were information/communication at 7% and administrative/support services and education both at 4%. Those areas that did not perform well were agriculture which dropped by 5%, electricity/gas supply down by 2% and accommodation/food service fell by 1%. Overall the services sector grew by 2.9% but construction fell by 0.4% and production fell by 0.3%.

The 2018 performance of the region’s six enterprise partnerships was also highlighted by the ONS. Of the UK’s 45 development bodies, Greater Birmingham and Solihull was ranked 1st in the UK (2017 ranking 27th) with growth of 2.8%. Stoke moved up the rankings from 33rd to 10th with growth of 2.1% and Coventry & Warwickshire moved up two places to 12th. Worcestershire moved up one place to 15th, but with slower growth, the region’s other two LEPs fell down the rankings, with the Black Country dropping from tenth to 31st and The Marches moving from fourth to 32nd.

More data from the ONS showed unemployment in the WM increased by 10,000 to 132,000 between August and October 2019; the increase of 0.3% took the overall rate to 4.5%, the second highest in the UK. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

The South West had the highest employment rate at 80.8% which compared with 75.1% in the WM. UK employment was estimated at 76.2%.

WM average property prices fell by 1.6% during October 2019 to £198,345, which took annual growth to 0.2%. In comparison, UK prices fell by 0.7% to £232,944, an annual growth rate of 0.7%.

The WM economy slips down the UK rankings, a significant decrease in regional unemployment, and internal discord perceptible during the HS2 review

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The mechanism by which councils will have the opportunity to bid for funding of up to £25m as part of the government’s £3.6bn Towns Fund  has been unveiled by Midlands Minister Robert Jenrick.

The Towns Fund prospectus provides information to councils in 100 places chosen to pioneer Town Deals. Councils will receive a share of £16.4m funding to shape up their plans.

The funding could be used to redevelop vacant buildings and land, support small businesses, boost transport links and increase access to high-speed broadband.

Lead councils in each place will bring together a Town Deal Board, including representatives from across the public, private and voluntary sectors, to develop bespoke Town Investment Plans by summer 2020.

Thirty towns are in the Midlands engine area. WM towns include Burton upon Trent, Crewe, Dudley, Hereford and Worcester amongst others.

The deputy chair of the HS2 review panel and critic of the project, Lord Berkeley, says he has been given no opportunity to influence the final report. Lord Berkeley, a civil engineer who worked on the construction of the Channel Tunnel, was appointed when Transport Secretary, Grant Shapps, launched the review in August.

The Department for Transport would not confirm when the Oakervee review would be published, but it seems likely this will now be after the election.

The new £88bn railway line would run from London to the West Midlands, Manchester and Leeds. Trains on the London to Birmingham route would be 400m-long, have up to 1,100 seats and would be capable of reaching speeds of up to 250mph. They would run as many as 14 times per hour in each direction and cut Birmingham to London journey times from one hour 21 minutes to 52 minutes.

Also on rail, West Midlands Trains routes were severely disrupted last month. West Midlands Trains operates West Midlands Railways and London Northwestern Railway, running services from London Euston to Birmingham and around the Midlands. On some days, 55% of its services were late or cancelled.

Train crew shortages, broken-down trains, a loss of power to overhead wires between Watford Junction and London Euston were cited as excuses.

Figures released by Network Rail in October showed one in five trains operated by West Midlands Railway were failing to arrive on time. This was the worst performance since the firm took over the franchise nearly two years ago.

The operator said a new timetable introduced in May had proved too complicated and a simplified timetable would be introduced on 15 December.

The Stats

Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its next estimates for the West Midlands, the other eight English regions, and Wales, for the year to March 2019. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

The latest available figures showed the WM economy grew by 2.3%, down from 3.2% growth the previous quarter. This placed the WM fourth (previous ranking second) out of the twelve UK ‘regions.’

London topped the table with growth of 4.2%. Propelled by a drive to meet the original March 31st Brexit date, UK growth over the same period was 2.2%.

The ONS figures showed that growth in the region’s economy eased off slightly in the quarter to March 2019. The WM economy grew by 0.5% in January to March 2019, following growth of 0.6% in October to December 2018.

In this period, the construction sector grew by 4.5% and made the biggest positive contribution to growth but manufacturing dipped by 1.7%, education fell by 4.2% and energy dropped by 6.5%.

In terms of sectors, services contributed positively to GDP growth, whereas both the agriculture and production sectors contracted.

Estimates published by ESCoE last month for the year ended September 2019, a more recent period than the ONS figures, ranked the WM ninth (previous ranking eleventh) with growth of 1.0%, which suggests the region has underperformed other parts of the UK since the winter.

Using this metric, UK growth was 1.45%. Growth in London (ranked first) was 2.32% which compared with the South West of England (bottom) at 0.41%

More positively, data from the ONS showed unemployment in the region decreased by 14,000 to 121,000 between July and September; the decrease of 0.5% was the second best performance in England and took the overall rate to 4.1%. Northern Ireland had the lowest rate at 2.5% with the UK rate at 3.8%. The highest rate was 5.9% which was recorded in the North East.

The South West had the highest employment rate at 81.0% which compared with 75.1% in the region. UK employment was estimated at 76.0%.

In September, average earnings in the WM were up by £14 to £591 per week. London had the highest average earnings of £830. The lowest average earnings of £527 were recorded in Wales. In the UK overall, average earnings grew by 3.6% or by 1.8% after inflation.

WM’s average property prices fell by 0.4% over the month to £201,273, which took annual growth to 1.6%. In comparison, UK prices fell by 0.2% to £234,370 during September, an annual growth rate of 1.3%.

A substantial drop in regional unemployment, bus services upgraded and battery operated trams in Brum

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Unemployment in the WM decreased by 23,000 to 117,000 between June and August, the fall of 0.8% was the second best in the UK and left the overall rate at 4.0%.

The South West continued to record the lowest rate at 2.4% with the UK rate at 3.9%. The highest rate was 5.8% which was recorded in the North East.

The South West also had the highest employment rate at 81.0% which compared with 74.8% in the WM. UK employment was estimated at 75.9%.

WM average property prices increased by 1.5% to £201,510, which took annual growth to 2.4%. In comparison, UK prices grew by 0.8% to £234,853 during August, an annual growth rate of 1.3%.

The ONS’s Personal Well-being (or Happiness) Index has ranked the WM fourth out of the 12 UK ‘regions’ in terms of an improvement in life satisfaction since the last survey. The Northern Irish were the happiest folk in the UK with Londoners the most miserable.

Development

The region will benefit from an extra £90m that the Department for Culture, Media and Sport has added to the Cultural Development Fund, which is for arts, culture, heritage and the creative industries in towns and cities outside London. Worcester was a winner last year, now £7m has been allocated to Coventry for its UK City of Culture 2021 plans.

Backed by the West Midlands Combined Authority, Peaky Blinders creator Steven Knight has launched Create Central to boost the region’s creative output and promote the area as a production base.

Evidence suggests Peaky Blinders has contributed to an uplift in screen tourism to the West Midlands, but the series is largely shot in Yorkshire and was initially funded by Screen Yorkshire.

A planning application has been submitted for the £70m redevelopment of Birmingham’s Alexander Stadium for the 2022 Commonwealth Games. The stadium will increase its permanent seating capacity from 12,700 to 18,000, and with additional temporary seating the capacity will be more than 30,000.

In Herefordshire, the Council is reviewing the southern link road and Hereford bypass projects.

If the local authority decides to scrap the former, then The Marches Local Enterprise Partnership will seek to retrieve its £3.8m which has been already spent on the project. Whilst greater devolution from Westminster has its benefits, infrastructure funding from multiple agencies also has its difficulties.

In Shrewsbury, the run-down Riverside Mall shopping centre and nearby medical practice, multi-storey car park and bus station could get redeveloped after an intervention by Shropshire Council following market failure.

The authority has asked for designs for the nine-acre Riverside precinct, eight years after a £150m upgrade from the previous owners did not proceed. The council is hoping to appoint consultants by early December, with phased demolition due to start by the end of next year.

Jobs

Up to 200 jobs are to be axed by Stoke-on-Trent City council. Reduced headcount will come through voluntary redundancies, as well as leaving 64 posts vacant. The cuts will enable the council to divert funds in to children’s services.

Wrexham-based firm Tomlinson Dairies, which had operations in Shropshire, has gone into administration. The firm employed 330 overall.

Transport

CBI West Midlands, East Midlands, Yorkshire and Humber, London, the North East and North West regional directors have urged the government to build the HS2 rail project in full.

However, a paper by the Adam Smith Institute, also released this month, claims that HS2 will deliver limited benefits and that some Northern cities could lose direct trains to London.

It recommends instead, upgrading existing routes with new signalling, doubling the number of tracks, reopening mothballed lines, building new sections of railway and targeting bottlenecks at key junctions.

Bus services in Birmingham and Dudley are to be upgraded with £30m of funding for new express lanes, upgrading junctions and better bus stops. The Department for Transport has committed £24m with the balance of the funding from West Midlands Bus Alliance partners, (Birmingham City Council and Transport for West Midlands, part of the West Midlands Combined Authority.)

The money forms part of the government’s long-term bus strategy and £220m funding settlement, which it hopes will see many cuts to services reversed. There will also be support for local authorities who want to create London-style franchised services in their areas. Greater Manchester is due to consult on adopting a proposed franchised model shortly.

Tram operator West Midlands Metro has bought 21 battery-powered trams from manufacturer CAF. The £83.5m deal includes the trams, technical support and battery management services over 30 years.

The trams will operate on new sections of the line between Grand Central and Hagley Road which are free of overhead cables. The current fleet will also be fitted with battery units.