Exploring the economic geography of COVID-19 across England

Sector mix a key factor

As we have seen previously in our geographic analyses, the sector mix of a place is a major determinant of short to medium-term economic performance. London and the South East are proving relatively resilient due to their higher share of professional, technical and financial services employment, sectors it has proven easier to move online. This is also true of some parts of the rest of the country such as Manchester, Birmingham and Leeds, but outside the major urban centres, greater reliance on retail, hospitality and the arts and leisure means there has been a more significant shock. Extreme examples include places like Skegness, somewhere the Centre for Towns estimated had 55% of employment in sectors subject to forced lockdown – a significant difference to the 21% or so in London.

The signs of change are everywhere

Despite the difficult circumstances, we were able to identify the potential for positive change in future. The reasonably successful move to remote, online working by sectors that have been able to, was seen across the country as offering the potential for new ways of working. A world with more flexible and virtual work, less commuting and increased time in local areas was seen as a possible shift offering benefits in lifestyle and to the environment. The lockdown period has allowed people and their employers to innovate and the hope is that the better parts of this experience might help to create a different balance between stakeholders.

Policy will be important

Change will not be easy and will certainly require collaboration between the public and private sectors. We identified several areas for future policy support with skills and infrastructure necessary to support the shift to more use of digital technologies being relevant across the country. It may be that we will have to reshape our investment plans and consider how the traditional focus on transport, especially in city centres, may need to be adapted to support change.

However, as well as looking to support future change, there was a wide recognition of the need for targeted recovery plans to support sectors facing the brunt of the COVID-19 effect. Tourism in many parts of the country, retail on high streets up and down England and the arts and leisure sector shave all been hit hard. The effect will be very deep in many places and regional sector support programmes may be needed to preserve capacity in vitally important economic areas.

Settling in for the long haul

These are unprecedented times. Businesses need to prepare themselves to manage across multiple scenarios and for continuing change for several years into the future. Engaging with their local communities and policy-makers will be crucial in rebuilding from the bottom up.

Listen to EY UK’s Chief Economist, Mark Gregory in conversation with EY’s senior leaders from throughout the UK discuss the economic outlook for London and South East England's regional markets in the context of COVID-19:

Listen to EY UK’s Chief Economist, Mark Gregory in conversation with EY’s senior leaders from throughout the UK discuss the economic geography of COVID-19 across the Midlands and North England: