Service sector bounce back puts city at the head of economic recovery, says reportDec 01, 2020
A NEW economic report predicts that Milton Keynes will lead the UK recovery from the Covid-19 crisis next year, with hopes of a vaccine set to boost a strong economic bounce back in the services sector.
The UK Powerhouse report prepared by Irwin Mitchell and the Centre for Economic and Business Research reveals that Milton Keynes will be in the top 10 cities for economic growth, with a GVA of 26.1% year-on-year increase in the second quarter of 2021 – three percentage points above the expected 23% national average.
Following the 10.7% contraction suffered by the local economy this year, the town is projected to see a 9.9% rise in annual GVA growth between now and the fourth quarter of 2021. This will see the town secure top spot for UK economic growth by the end of next year.
The report is welcome news for a town that has experienced one of the harshest downturns in the UK as a result of the lockdown but looks set to recover quickly as soon as the worst impact of the coronavirus crisis is over and a vaccine becomes widely available.
UK Powerhouse paints a positive picture for the services industry, with the sector one of the main contributors to the economic recovery seen in the third quarter of 2020. With Milton Keynes made up of 90% service industries, the trend is expected to gather strength in 2021.
Boasting highly skilled and established service sectors such as IT and business services, Milton Keynes has not been immune from the impact of the pandemic, which saw the closure in June of Adelie Foods, one of the UK’s largest sandwich makers, with a cost of 2,000 jobs.
Yet as distribution and storage centre, the report says the town is well positioned to benefit from the growth in logistics and online retail, with Milton Keynes home to Magna Park, which houses major logistics bases for Marks & Spencer, Amazon, John Lewis and Adidas.
Employment has contracted throughout the UK due to the lockdown and is one of the last measures expected to recover. It will be a tough first quarter in 2021 in terms of jobs, but thanks to the furlough scheme, this will not be as bad as originally anticipated.
By Q4 of 2021, Milton Keynes is projected to see 7.1% growth in employment – not a match for its GVA performance, but only just outside the UK’s projected top 10 job creation hotspots.
Victoria Brackett, CEO of Irwin Mitchell’s Business Legal Services division, said: “The prospect of a vaccine means our new normal may be better than expected and this is good news for places like Milton Keynes, whose economies are heavily biased towards service industries.
“The last recession in 2009 saw the local economy contract significantly, only to recover strongly in 2010, so the town has a proven ability to bounce back from economic shocks and this report predicts a similar performance in 2021, once the worst of the lockdown crisis is behind us.
“A vaccine promises a return to consumer spending and business investment and these twin pillars of growth are going to be crucial in the coming year as the UK comes to terms with the reality and the opportunities presented by Brexit.”
The report’s findings support Milton Keynes Council’s vision of continuing to attract major businesses to the city, which result in good, well paid and secure jobs for local people. The study also highlights the distribution strengths in the city, driven by ongoing growth in online retail.
Earlier this year, the council set out a £2.25 million economic recovery plan to help drive growth, create new green and creative jobs and help people into work.
The report by Irwin Mitchell and the Centre for Economics and Business Research predicts a 9% bounce back by the end of 2021 – faster than all other 46 towns and cities in the report.
Milton Keynes Council leader Cllr Pete Marland said: “This report is encouraging and should provide some hope to both local people and businesses who are really struggling right now. We should be under no illusions that our poorest and most vulnerable residents are being hit the hardest as a result of this pandemic.
“The findings are in line with the work we’re doing to rebuild and restore confidence in the local economy and reinforces the point that MK always comes back stronger.”
The report highlights Milton Keynes’ strong track record of rapid recovery in times of economic downturn. In the last recession, MK saw a sharp increase in economic growth in 2010, much faster than similar towns and cities of its size.