A new economic report published says that Oxford is expected to lead the nation’s post-COVID-19 economic growth in 2021 with some of the fastest employment growth in the UK.
The latest UK Powerhouse report from Irwin Mitchell and the Centre for Economic and Business Research (Cebr) reveals that Oxford had 3.0% employment growth in Q4 2020 – the fastest employment growth out of the UK Powerhouse cities.
The report adds that the dominant life sciences and research sectors in Oxford will be an important in Oxford’s fast post-COVID-19 economic growth in 2021, following a rise in funding during the coronavirus pandemic, as research into vaccinations and viruses became more important.
The report says that this level of employment growth will dip to 1.5% in the 12 months to Q4 2021, but that it will still create 2,200 new jobs and take the tally to 144,700.
Oxford is also ranked 8th out of the top 50 cities surveyed for GVA, with a 7.1% growth during 2021. Compared to the end of 2020, Oxford’s economy will grow by £1.4 billion to reach £20.5 billion by the end of 2021.
According to the report, London is expected to see the sharpest decline in employment in Q4 2021, with outer London areas forecast to see a 5.4% fall in employment due to jobs being lost in industries like accommodation and food services, when the furlough scheme ends.
Conversely, Solihull, its proximity to Birmingham, is forecast to see the fastest growth in Q4 2021 with a 7.7% annual increase as working from home becomes the norm and people migrate out of large cities.
Only 36% of cities in the report are expected to increase employment levels in Q4 2021. In other words, over three in five cities are expected to see an annual fall in employment in Q4 2021 as the furlough scheme draws to a close at the end of September.
More broadly, the report reveals that the UK economy grew by 1.0% in the fourth quarter of 2020. This performance marked a substantial slowdown from the 16.1% growth rate witnessed in Q3. But it meant that the UK economy avoided a double-dip in the final months of the year.
This takes GDP for the whole of 2020 to a level 9.9% lower than in 2019, marking the worst year-on-year performance since official records began.
A further contraction was avoided in Q4, given the prevalence of restriction measures during the quarter, including the second nationwide lockdown. Though output suffered a lockdown-induced dip in November, higher levels of output in October and December were more than sufficient to offset this.
But there’s a large variation in the performance of the sectors. For example, while the services sector saw quarterly growth of 0.6% in Q4, subsectors within it witnessed large-scale contractions. This was most evident in the accommodation & food services sector, where a 32.8% quarterly contraction acted as a significant drag on total output growth.
Meanwhile, manufacturing saw a strong performance, with 3.3% quarterly growth, and the construction sector, with 4.6% growth compared to Q3. The subsector of new-build private housing saw a particularly large uptick, of 6.7%, reflecting the continuing boom in the wider housing market.
In comparison with similar economies, these figures suggest the UK was a relatively strong performer at the end of 2020. For instance, the Eurozone saw a contraction of 0.7% in Q4, according to estimates from Eurostat.
Vicky Brackett, Partner and Head of Irwin Mitchell’s Business Legal Services division, said: “Similar to all other towns and cities in the report, Oxford suffered a contraction in the size of its economy during 2020. It has recovered very strongly, however, and by the end of 2021, it is expected to be in the top 10 for GVA growth and job creation.
“Oxford cannot afford to be complacent, though. With the impact of the end of the furlough scheme expected to have a negative impact on employment, it is clear that local plans for job creation need to be in place before October.
“It is also clear that a resolution to some of the outstanding issues surrounding Brexit can only have a positive impact on the future outlook. Supporting those SMEs in the region who export to the EU will not only enhance the economic output, but can also make a positive contribution to the local jobs market.”
The UK Powerhouse report makes several recommendations to tackle the difficulties business will face coming out of lockdown. These include the need to take advantage of policies to encourage investment and improve skills and local government having bespoke plans in place to support job creation. The UK Government also needs to prioritise implementation of the TCA with as little disruption as possible to businesses and negotiating a smoother trading relationship with the EU post-Brexit.
* GVA Q4 2021 annualised. Chain volume measure (CVM) estimates at constant prices.