Recovery: Think local to level up, says new growth reportJan 22, 2021
Magna Park, home to leading logistics and distribution companies.
THE HIGH proportion of wholesale and retail businesses in Milton Keynes will impact its annual growth in Gross Value Added as the UK economy bounces back from the effects of the coronavirus pandemic, says a new report.
Almost one in five businesses ply their trade in the sector, which has been affected by consumers shopping online rather than in their local high streets, says new analysis in the latest PwC-Demos Good Growth for Cities report.
It is a trend that is likely to continue this year. Although Milton Keynes is among the top five cities in the report’s recovery index, its annual GVA rate of growth is the third lowest in the UK, at 4%.
The report says that the cities and towns hardest hit by the economic fall-out from the pandemic are likely to make the fastest recovery but are expected to be worse off than at the beginning of the pandemic compared to more resilient places.
Cities in the Midlands, such as Birmingham, Wolverhampton and Walsall, Nottingham and Derby, have seen their economies decrease by more than 11.7% in 2020 yet are among those with the strongest projected GVA growth rates for 2021, of 4.8% and higher.
However, the report adds, 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.
Cllr Carole Baume, cabinet member for economic development on Milton Keynes Council, said: “It is great to see another vote of confidence in Milton Keynes and its recovery, which highlights our underlying strengths. We know that many local businesses have it really tough right now and we are doing what we can to provide support through our Economic Recovery Plan and business grants.
“More help will be available in our council budget for next year. I am confident that that through our collective efforts with local businesses and people we will see a strong economic recovery.”
As the UK looks to ‘build back better’ from the pandemic, ensuring that the recovery lays the foundations for building resilience against future shocks will be vital. Learning and embedding lessons from cities, such as Oxford, Leicester, Leeds and Edinburgh, which have performed more strongly over the longer term pre-pandemic in areas such as jobs, health and skills, is key to driving more balanced and sustainable economic growth across the UK.
The report calls for increased effort to address issues such as improving local skills, encouraging new business development and addressing local environmental challenges while directing effort and resources to the towns and cities that need them to achieve longer-term sustainable growth.
Creating employment opportunities and improving skills levels should be top priorities nationally and locally, particularly for younger people.
Sam Taylor, PwC’s Milton Keynes market senior partner, said: “In Milton Keynes, we see strong performance in jobs, income, health, skills and owner occupation measures on the index. However, this positive performance is also coupled with lower scores in work life balance, house price to earnings and transport.
“The pandemic has led to people living their life much closer to home and the likelihood is some of these lifestyle changes will stay for the medium-term. Citizens will value different things and those places that meet those needs will be the ones that bounce back quicker.
“This opens up opportunities for places that have advantages in terms of liveability and community, and where ‘price of success’ factors, such as housing affordability, are less of an issue.”
The Good Growth for Cities Index ranks 42 of the UK’s largest cities based on the public’s assessment of key economic wellbeing factors including jobs, health, income, skills, business start-ups and work-life balance. The analysis also assessed the sectoral make-up, the impact of the use of the furlough scheme to protect jobs and rates of Universal Credit claims, Covid infection and mobility rates to project GVA growth rates for 2020 and 2021.
Milton Keynes has one of the lowest take-up rates of Universal Credit at 4.9% in November.
Karen Finlayson, PwC’s regional lead for government and health industries, said: “The pandemic has made us more acutely aware of existing economic and social inequalities and why it is so important to ‘level up’ across the UK. It reinforces our view in Good Growth for Cities of the necessity to look beyond GDP and headlines about the North-South divide to focus efforts on tackling the issues that really matter to the public – and local economies – such as skills, sustainable income and health and wellbeing.
“A broad brush approach to levelling up will not address the challenges facing the places that have been hardest hit. We need a precise approach which takes into account the strengths and needs of individual towns and cities to build more resilience and drive a fair recovery across the UK.
“Given continued uncertainties, particularly with the post EU trading environment and unknowns around pandemic recovery, action is required so that levelling up is a reality not an unattainable aspiration.”
With more people working from home, towns and cities have new opportunities to build virtual connections and play to their strengths in terms of liveability, affordability and community, the report says. There is still much uncertainty over how these trends will play out in the long term, however a move to hybrid home and office working has the potential to level up certain areas of the country.
Mr Taylor said: “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.
“The region’s long-term growth ambitions, collaborations and entrepreneurial spirit across public and private partnerships has resulted in Milton Keynes, Oxford and Cambridge remaining in the top 10 of the index. The vision for the Cambridge – Milton Keynes – Oxford Growth Arc will continue to attract investment in business, infrastructure, research and development and education to support recovery in the region.”