11. Overview of the Midlands (via Midlands Engine Economic Observatory)
UK private sector companies reported a sharp and accelerated increase in business activity during August.
Both the manufacturing and service sectors are continuing to experience a recovery in consumer demand.
The headline seasonally adjusted IHS Markit / CIPS Flash UK Composite Output Index –registered 60.3 in August, up from 57.0 in July and signalling the fastest rate of business activity expansion since October 2013.
The index for the West Midlands increased from 50.4 in June 2020 to 61.9 in July 2020.
Notably, this is the second-fastest increase in the survey’s history.
The index for East Midlands Business Activity increased from 50.4 in June 2020 to 58.1 in July 2020.
This increase is the fastest reported since February 2018 as client demand has been boosted since the broad reopening of businesses.
According to the ONS Business Impact of Coronavirus Survey (BICS), 55.8% of trading businesses in the West Midlands and 51.5% of East Midlands businesses reported their turnover had decreased by at least 20% (UK 50.8%).
However, 26.0% of trading businesses in the West Midlands and 28.4% for the East Midlands reported that their turnover was unaffected (UK 31.7%) and 12.0% reported their turnover had increased by at least 20% in the West Midlands and 13.4% for the East Midlands (UK 10.5%).
Concern is growing about the business and employment impacts of local lockdown in Leicester.
It has borne heavily on businesses that incurred significant costs in preparation for the anticipated opening of additional sectors on 4th July.
Inconsistencies in the handling of local lockdowns across the country are now being cited as problematic for businesses operating from multiple sites across the country.
Education and Skills
The closure of schools and other educational establishments inevitably impacts on learning.
OECD analysis of 2018 PISA data reported by Eyles et al. (2020) shows that 40% of economically disadvantaged students in UK secondary schools had access to online learning platforms, compared with 70% of more advantaged peers.
Nationally there have been record-breaking results for GCSEs with 25.9% of students awarded grade 7 or higher (under the old system is equal to an A or A*) compared to 20.7% for 2018/19. A-Level grades are 14% higher than last year.
Large discrepancies can be seen at the lower end of the grade spectrum.
Universities in the Midlands are reporting strong recruitment from home students for both undergraduate and postgraduate places.
There has been strong interest and applications from international students but a lower number of actual starts anticipated.
This follows a national trend of UK domiciled students deciding to go to university to ‘ride out’ the effects of the pandemic on the jobs market.
Higher grades may have allowed some students to apply to university through clearing which they may not have been able to had they sat their exams and got lower grades.
Apprenticeship Recruitment is variable across sectors, and there is a steep decline in apprenticeship starts compared to 2019.
The COVID-19 recession has serious implications for school, college and university leavers entering a job market which in the near term has comparatively little to offer them.
Further education in the Midlands concentrated at the lower end of the skills spectrum raising the concern that new entrants to the job market may struggle to compete with more experienced candidates who have recently lost their jobs.
The region’s large university sector has over 132,500 graduates and postgraduate students due to complete their studies from universities in 2020.
The result may be unemployment for many who will have completed their courses of study in recent and coming months, as well as a greater demand for further education from those hoping to improve their prospects.
1,486,900 workers were furloughed in the Midlands throughout the Coronavirus Job Retention Scheme a take-up rate of 33% across the region which is above the UK average of 32%.
Alongside 423,540 claimants in July aged 16 years and over in the Midlands Engine (5.1% of the 16+ population) this indicates a critical need for investment in life-long learning.