Change and Renewal Recession Recovery in Birmingham Solihull
Change and Renewal Recession & Recovery in Birmingham & Solihull The Churches’ Industrial Group Birmingham Glynn Jones Thursday 10 th June 2010
Presentation 1. Economic context 2. The Birmingham and Solihull economy 3. Economic futures 4. Key challenges 1
The nation has experienced a very deep recession, especially affecting construction and manufacturing…. Source: ONS, UK Output, Income & Expenditure, February 2010 Notes: Q 4 2009 GDP was revised up from +0. 1% up to 0. 4%; Q 1 2010 up from 0. 2% to 0. 3% Estimates of the recession have been revised downwards from 6% to 6. 3%. 2
Which the West Midlands has been especially vulnerable to PMI Output (12 -month average) 12 Seasonally Adjusted Unemployment Rate (Q 1 2007 - Q 1 2010) West Midlands Yorkshire & Humber 10 ILO Employment Rate (%) East England East Midlands South East North East South West North West 8 6 4 2 North East North West Yorkshire & Humber East Midlands West Midlands England London 40 45 50 55 PMI (50 = no change on previous month) 60 0 2007 Q 1 2007 Q 3 2008 Q 1 2008 Q 3 2009 Q 1 2009 Q 3 2010 Q 1 Source: PMI West Midlands, Markit Economics / AWM, May 2010 ONS Labour Market Statistics, May 2010 3
However, it is clear that the regional economy has been performing poorly over a much longer period. . . Note: GDP and GVA data are NOT directly comparable GDP = GVA + taxes on products - subsidies on products Source: Office of National Statistics 4
With the West Midlands experiencing the lowest average annual growth in GVA per head (2000 -07) of any UK region 5
2. The Birmingham & Solihull Economy
Birmingham and Solihull make up a quarter of the regional economy Proportion of regional GVA attributable to Birmingham & Solihull 27. 0% Contribution of Birmingham & Solihull to West Midlands GVA 26. 5% 26. 0% 25. 5% 25. 0% 24. 5% 24. 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Notes: Birmingham comprises 21% & Solihull 5% of regional GVA 7
But recent growth has been driven by the public sector, whilst employment in the private sector has shrunk. . . Source: Work Foundation Analysis 2009 8
And the performance of (high-value) financial & business services has been especially poor 9
Hence overall growth in GVA per head in Birmingham has been lower than that for most other English core cities…. Change in GVA per capita across the Core Cities 1996 -2006 90 % change in GVA per capita, 1996 -2006 % change in GVA per capital 1996 -2006 80 70 60 50 40 30 20 10 0 Nottingham Birmingham Leeds Manchester Bristol Sheffield Liverpool Newcastle Source: Work Foundation Analysis, ONS 2009 10
And after very strong recent growth there are emerging signs that Solihull’s growth is now ‘plateauxing’ GVA per head relative to UK average West Midlands Birmingham Solihull GVA per head relative to UK (100 = UK) 130 120 110 100 90 80 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 11
Birmingham especially has very high rates of worklessness, in part reflecting its demography. . . Source: NOMIS, Annual Population Survey, May 2010 In this graph, ‘Unemployed’ are working age people who are without a job, but who are actively seeking and able to start work. ‘Economically inactive’ are working age people who are neither in employment nor unemployed 12
With very high worklessness rates for specific ethnic groups worklessness as a percentage of population 90 Working age worklessness rate Birmingham Jan 2008 -Dec 2008 80 70 60 50 40 30 20 10 0 All Males Females White All Males Indian Females All Males Females Pakistani / Bangladeshi All Males Females Black British Source: Annual Population Survey, 2009 13
Birmingham home to four of the top five highest claimant proportions in England Top four claimant proportions in England: Ladywood, Hodge Hill, Sparkbrook & Small Heath, Erdington North Solihull has 4 SOAs in the top 1% most deprived nationally 14
3. Economic Futures
Whilst conditions are improving, forward projections suggest the recovery will be slow (and fragile) Average of Medium-Term Independent Forecasts 3 Forecasts GDP Growth (%) 2. 5 2 1. 5 1 0. 5 0 2011 2012 2013 2014 16
Initial recovery may be ‘jobless’ with implications for those groups most impacted by recession. . . Source: Labour Force Survey, 2009 17
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Also Birmingham has a very ‘young’ population – creating significant demands for new jobs 10 Age structure of Birmingham compared to the UK - 2008 % of population in each age group 9 Birmingham 8 UK 7 6 5 4 3 2 1 0 Un 1 - 4 5 - 9 10 - 15 - 20 - 25 - 30 - 35 - 40 - 45 - 50 - 55 - 60 - 65 - 70 - 75 - 80 - 85 + der 14 19 24 29 34 39 44 49 54 59 64 69 74 79 84 1 Source: NOMIS mid-year population estimates 2009 19
However, Birmingham is now vulnerable to public sector cuts, affecting many ‘under-represented’ groups 20
This is reflected in the changes in redundancy notifications Notified Redundancies (Jan-Mar 09) Notified Redundancies (Dec - Feb 10) 29% 3% 56% 32% 5% 2% 4% 21% manufacturing services construction public other 8% 39% Source: Jobcentre Plus, Notified Redundancies, February 2010 Note: ‘Other’ includes Agriculture & Fishing and Energy & Water 21
Malvern Hills Staffordshire Moorlands South Staffordshire Wyre Forest Bromsgrove Tamworth Cannock Chase North Warwickshire Nuneaton and Bedworth Redditch Rugby Lichfield Newcastle-under-Lyme -20 Wychavon Worcester East Staffordshire Stratford-on-Avon Stafford Herefordshire Warwick Telford and Wrekin Stoke-on-Trent Walsall Dudley Shropshire 10 Wolverhampton Solihull Sandwell Coventry Birmingham Absolute change in thousands Looking forward, whilst Solihull is forecast to see job growth this is largely offset by decline in Birmingham Absolute change in employment 2001 -2010 and 2010 -2020 by Local Authority 5 0 -5 -10 -15 Absolute change in employment 2001 -2010 Absolute change in employment 2010 -2020 -25 Source: Economic projections from SQW, The Economic Demand for Housing the West Midlands, 2000 -2026 22
4. Key Challenges
4 key challenges facing Birmingham & Solihull 1. Achieving a rebalanced economy ? 2. Creating sufficient jobs for : • those without qualifications • younger people • a rapidly growing workforce 3. Maintaining the momentum on regeneration & sustainable communities 4. Assisting communities and individuals to adapt 24
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