A new economic survey predicts that two welsh cities will see the fastest rebound in employment of the top 50 UK cities by the end of 2021.
A full economic recovery will run into 2022, following the twin impact of both Covid-19 lockdown restrictions and Brexit.
The latest UK Powerhouse report prepared by Irwin Mitchell and the Centre for Economic and Business Research (Cebr) reveals that Cardiff and Swansea will be in the top three cities for year-on-year employment growth by Q4 2021, beaten only by Cambridge.
With the end of the furlough scheme, only 36% of cities in the report are expected to increase employment levels in Q4 2021, with Cardiff and Swansea in second and third place respectively.
Over three in five cities are expected to see a fall in employment following the end of furlough in September, with many businesses expected to make redundancies for workers they can’t afford. Cardiff and Swansea are predicted to buck the trend, thanks to well established employment in the public sector that will see essential jobs protected.
Despite Cardiff being in the top 10 for economic growth in Q4 2020, both the capital and Swansea will have fallen into the bottom five for GVA growth in 2021.
This suggests that despite the protected jobs market afforded by the public sector, this will not lead to a corresponding growth in economic activity in the short term.
The UK Powerhouse report makes several recommendations for businesses looking to successfully emerge from lockdown and the challenges posed by Brexit. These include the need for policies to encourage investment and improve skills and local government having bespoke plans in place to support job creation heading out of the Covid-19 crisis, when the furlough scheme ends.
The UK Government also needs to prioritise the implementation of the UK-EU Trade and Cooperation Agreement (TCA) with as little disruption as possible to businesses and negotiate where possible to reach a smoother trading relationship with the EU post Brexit.
The report suggests that Welsh cities will need such support, to re-establish positive economic growth, despite the benefits of a stable employment. At the start of Covid-19, Wales was losing £79m a day due to the lockdown, a GVA loss of 37%, and the road to recovery will take time.
Victoria Brackett – CEO of Business Legal Services & Partner at Irwin Mitchell said: “Wales has a large manufacturing base and this, coupled with a strong public sector is going to protect employment but any economic growth to come is predicted to be fragile at best.
“Lockdown will have changes some business models forever and going forwards, it’s important that stability in the jobs market does not mask the need to stimulate economic growth in the longer term.
“Only 3.5% of the welsh workforce had experience of working from home prior to lockdown and this fact, plus the absence of high skilled service roles will need to be addressed to give Welsh cities a level playing field with other UK cities, as business throughout the UK adjust to a new normal and ponder how to attract the investment necessary for future prosperity.
“Support in the form of the government’s levelling up agenda will be important for Wales in order to consolidate on the stability promised this year to deliver long term economic benefit.”
(Lead image: Swansea Council)
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