North set to lose years of economic growth due to pandemic

New research has found that regions in the North of England could lose between six and fourteen years worth of growth due to the financial hit created by the pandemic.

The research by business lender iwoca found that the North East, North West and Yorkshire and the Humber have been forecast to lose 11.7%, 11.2% and 12% of GVA respectively in 2020. Analysis of the region’s GDP statistics from previous years suggests that these falls would erase the economic growth made between 2004-2018 in the North East, 2012-2018 in the North West and 2010-2018 in Yorkshire and the Humber. In terms of total years of growth lost, these regions make up three of the top six in England.

Businesses in the North could also be more vulnerable to the adverse effects of the Covid-19 crisis. The ONS identified the sectors of ‘Accommodation & food services’ and ‘Arts, entertainment, recreation & other services’ as being the two worst affected by the pandemic between January and July, and these are sectors likely to be greatly impacted by further local lockdowns.

The research has found that the three regions in the North have the highest proportions of businesses in these sectors in the country. In the North East 16.4% of businesses fall into these sectors, with the North West having 12.8% and Yorkshire and the Humber with 13.5% of businesses in these sectors.

According to the most recent data from HMRC, these sectors have also seen the highest proportion of jobs furloughed. In the arts, entertainment and recreation sector, 45% of employees were on the furlough scheme at the end of July, and 43% of workers in accommodation and food services were furloughed.

This higher vulnerability could compound the economic effects of additional restrictions which the Government has outlined for towns and cities in the North.

Christoph Rieche, CEO of iwoca said “Small businesses around the country have been hit hard by the pandemic, but it’s clear that some parts of the country – particularly the North – are suffering disproportionately. We want to support business owners in these areas to give them the best chance of recovery over the next few years. With this financial commitment we hope that we can drive up growth and help businesses across the North thrive.”