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.

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