Understanding and Responding to the Recession in the West Midlands

1
Understanding and Responding to the Recession in
the West Midlands

• Presentation to the WMRAF
• Thursday 11th June 2009
• Glynn Jones
• Advantage West Midlands

2
Presentation

• Economic update
• Vulnerable places
• Task Force

3
Global economy is in severe recession the
recovery in the UK is expected to be slow
protracted

• Q4 08 - Advanced economies see unprecedented
  decline (-7.5) in GDP
• Q1 09 Advanced economies expected to experience
  only slightly lower decline
• 2009 - Global output forecast to decline by
  -1.3 Advanced economies by -3.8, UK by -4.1
• 2010 Global output - recovering gradually
  (1.9) Advanced economies stagnant (0 growth)
• 2010 - UK economy to contract (-0.4)

Source IMF World Economic Outlook, April 2009
4
Forecasts of UK growth prospects continue to be
downgraded
Source ONS, GDP Annual Growth, 2009 / HM
Treasury, Independent Forecasts, May 2009
5
West Midlands businesses are seeing a sharper
contraction in output and new orders than other
regions
Source RBS/ Markit Economics, Purchasing
Managers Index, May 2009
6
West Midlands businesses are shedding staff
faster than any other UK region
Source RBS/ Markit Economics, May 2009
7
Manufacturing, especially the automotive supply
chain, is worst affected by redundancies
Source Job Centre Plus, April 2009
8
Several of the regions strategically important
sectors are also very vulnerable
High
Vulnerability
Low
Low
High
Strategic Importance
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The region is seeing a rapid rise in unemployment
now the highest rate in the UK
Source ONS Labour Market Statistics, May 2009
10
All parts of the region have seen increases in
the proportion of people claiming Jobseekers
Allowance
Source ONS Labour Market Statistics, May 2009
11
Rural areas have seen some of the greatest
relative increases in claimant levels
Source ONS Labour Market Statistics, May 2009
12
We must distinguish areas vulnerable to the
recession those suffering long-standing issues
of disadvantage
High
Vulnerability
Low
Low
High
Disadvantage
13
Partnerships are responding nationally,
regionally and locally

• National Economic Council
• Chaired by the Prime Minister
• Meets Weekly

Regional Council of Ministers Chaired by the
Liam Byrne Includes Regional Ministers Meets
Bi-weekly
Regional Economic Council Chaired by Chancellor
Lord Mandleson Includes Regional Ministers
RDA Chairs Meets Quarterly
West Midlands Council of Economic
Advisors Chaired by Ian Austin MP Includes Pat
McFadden MP Ian Pearson MP Advisory in nature,
Includes CBI, WMCoC, IoD, FSB, EEF, WMBC,
AWM Will meet Quarterly, timetabled before the
Regional Economic Council
West Midlands Taskforce Prepare for Potential
Economic Shocks Chaired by Ian Austin MP
Includes AWM, LSC, JC, HCA, SHA, GOWM, RA, TU,
Bus. Orgs Meets Monthly
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The West Midlands Taskforce was one of the first
in operation

• Priorities December 2008 March 2009
• Put in place working structures to deal with
  initial response to the downturn.
• To take forward priorities, 6 workstreams were
  established.
• Business Support (Led by AWM and Business Link)
• Infrastructure (Led by GOWM)
• Workforce (Led by LSC and JC)
• Communications (Led by AWM)
• Data and Intelligence (Led by AWM)
• Communities (led by Local Authorities)
• Each work stream developed a Quick Wins action
  plan to move forward the immediate priorities (44
  actions identified)

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West Midlands Council of Economic Advisors

• Priorities identified in November 2008
• Availability of finance
• Workforce retention
• Help for automotive sector

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Wide range of responses have been coordinated
through the Taskforce and its partners

• Delivery to date
• Advantage Transition Bridge Fund set-up
  initially 3m, now 9m, so far 48 loans, totaling
  8,049,000 have been approved
• www.supportwm.co.uk launched 26th January,
  offers a central point of contact for businesses
  and individuals during this economic downturn
  (2,800 hits in first week now over 25,000 hits)
• supportwm signposting campaign rolled out late
  Jan onwards
• Monthly economic reports to monitor and assess
  regional economy and effectiveness of
  interventions
• 61 m infrastructure programme, encouraging
  regeneration and investment

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Delivery to date (continued)

• Increased support and advice for businesses via
  Business Link and MAS.
• Over 70 m spent in 2008/09 on provision of
  advice and direct support.
• Activity refocused to meet needs of businesses in
  current climate.
• Specific liquidity assistance (through MAS)
  provided to 114 SME manufacturers at a fully
  subsidised rate generating estimated benefit of
  over 1.7 m.
• A series of credit crunch workshops have taken
  place around the region (116 held since
  November).
• 2.2m of funding provided for the regions
  Community Development Finance Institutions
  (CDFIs).

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Delivery to date (continued)

• Assistance provided to regions leading companies
  in developing new technologies support
  modernisation
• 5m automotive package
• Action plan for Construction developed
• Action plan for Business and Professional
  Services in development
• Lobbying on key issues

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Future Priorities March September 2009

• Business Support
• Provide Support for strategically important
  vulnerable sectors and supporting strategically
  important companies.
• Automotive - Computer Services / Digital
• Construction - Aerospace
• Business Professional Services
• Creating and exploiting economic opportunities.
• International Trade
• Green Technologies
• Leveraging Public Spending (Procurement)
• Sustainable Businesses (local sourcing, low
  carbon economy etc)
• Supporting Graduates / Apprentices