Derby placed in top 10 for economic recovery
Derby is among the UK cities which are expected to emerge stronger from the Covid-19 pandemic, according to a new report.
The latest PwC-Demos Good Growth for Cities report claims that the UK cities and towns hardest hit by the economic impact of Covid are likely to make the fastest recovery.
While Derby has faced its challenges, particularly the impact of the coronavirus crisis on the aerospace sector, the the Derby City Council-led Economic Recovery Taskforce has formulated a plan to help the city bounce back.
The strategy is built around three key areas: maintaining short-term confidence among local businesses and external investors, diversifying the city centre and Derby’s employment base and decarbonising the city.
Ali Breadon, East Midlands market senior partner and Midlands government and health industries leader at PwC said: “The pandemic has led to people living their life much closer to home and the likelihood is some of these lifestyle changes will stay for the medium-term.
“Citizens will value different things and those places that meet those needs will be the ones that bounce back quicker.”
According to the report, Derby saw its economy decrease by 11.7% in 2020.
But its predicted Gross Value Added (GVA) growth rate for 2021 is among the strongest of the 42 cities studied, placed 10th overall with a growth rate of 4.9%, hot on the heels of Manchester (5.1%) and Liverpool (5.4%).
Another key finding of the Good Growth for Cities report centres around the furlough scheme.
The study found that despite the decrease in Derby’s economy, the city had one of the lowest rates of workers on the UK Coronavirus Job Retention scheme, placing only 6.4% of its workforce on the scheme during 2020.
The city also had one of the lowest increases in the take-up rate of Universal Credit at 2.6% between January to November. For example, in comparison, Birmingham saw the third highest increase of 4%.
Overall, the PwC-Demos report concludes that as the business sectors most impacted by restrictions reopen, the cities most negatively affected due to their sectoral mix will see faster recoveries.
However, the study says a return to pre-pandemic conditions will not necessarily instigate a dramatic upturn in economic activity and these city economies will still be smaller in 2021 than they were in 2019.
Ali Breadon, from PwC, said: “As a whole, cities in the East Midlands have performed well on the environment, owner occupation and income distribution measures on the index.
“However, this positive performance is also coupled with lower scores in skills, health and work life balance.
“High unemployment rates, especially for young people entering the labour force in one of the toughest economic environments, will make employment opportunities even more competitive and potentially undermine social mobility efforts in the region.”
Some of the findings from the PwC-Demos study mirror the latest UK Powerhouse report, which was recently published by law firm Irwin Mitchell and the Centre for Economics and Business research (Cebr).
It predicts that Derby's annual GVA growth in the second quarter of next year will be 25%, ahead of Leicester (24.9%) and Nottingham (23.2%).
The report, which assumes a substantial proportion of the UK population will have received a Covid-19 vaccine by the middle of next year, states that Derby’s economic output is expected to increase by 7.3% to £6.7 billion by the final quarter of 2021, with employment moving back into positive territory at 5.5% growth.
John Forkin, managing director of Marketing Derby, said: "While all cities are facing the challenge of recovery, this is now the second report that puts Derby in the lead group.
"Key to this is attracting investment and key to that is the role confidence plays. Marketing Derby will be sharing this with the wider investment community."