State of the Region 2020 Full Report

The closure of the hospitality, retail, tourism and cultural sectors has also taken a heavy toll, especially in rural and peripheral areas dependent on this as a large part of their economy. Latest WMGC data highlights 80% of businesses are now closed in the tourism sector. All have seen a drop in revenue of more than 50% and 60% are experiencing cash flow problems. Most businesses are worried that without additional support, they may not survive lockdown. Some 10% say they are contemplating permanent closure in the next few weeks and another 40% say they may be facing failure by the end of the summer. An audience survey by Indigo highlights only 17% of audience responses are booking for events, half of which are for events from November onwards and 35% are in Sept/October.

A significant proportion of firms report having applied for, or planning to apply for, finance through the Coronavirus Business Interruption Loan Scheme or Bounce Back Loan Scheme and 1 in 4 firms report pressure to increase prices arising from finance costs, indicating high levels of debt accruing within the business community. Going forward the burden of debt is significant; nationally it is forecast to be around £100bn.Payments are now being pushed back across the board, including public sector payments, which is creating a huge credit risk in supply chains. Businesses are understandably reluctant to take on debt they may not be able to pay back, and bank lending processes are still an issue due to the length of time taken and the decision making processes. The new bounce back loans seem to have a higher interest. The furlough scheme is working well and making a difference to businesses and whether they can withstand the current crisis.

Highlighted in purple, the following table shows the sectors where the WMCA (3 LEP area) has a higher percentage of jobs when compared to the England average –this includes advanced manufacturing and engineering (11.4% vs 8.0%), the public sector including education (13.1% vs 12.9%) and logistics and transport technologies (5.9% vs 4.9%) , life sciences and health care (13% v 12.7%) and retail (16.6% v 15.3%). In order to determine which sectors are currently most vulnerable we have applied the broad sector analysis from the Office for Budget Responsibility scenario to the 10 main sectors for the WMCA. The table also shows on a red -green shading scale which sectors will be potentially affected the most and how much that sector accounts for the overall total. This headline analysis suggests that the public sector (including education) and the visitor economy sector will be the sectors most impacted from the Covid-19.  Analysis suggests that the life sciences and healthcare may be the only sector that will be unscathed, but notably also one of main sectors that has took the brunt of the human impact from Covid-19.