A new direction
Priorities shift to innovation and enterprise as years of under performance come to the fore.
The problems faced by the West Midlands economy have been exacerbated by the recession but weren’t caused by it. That is the key message Sir Roy McNulty, newly appointed chairman of regional development agency Advantage West Midlands (AWM), is keen to highlight looking into 2010.
“The West Midlands has underperformed in the last 20 years and the gap is growing,” he says. “The recession has brought out in stark relief a lot of weaknesses. There are comparatively low skill levels, low levels of innovation and enterprise, and business start-ups. There are also infrastructure and transport problems and economic inclusion problems. The nature of these problems hasn’t changed because of the recession. It has accentuated them. Tackling that is probably the biggest priority of all.”
Most worryingly, unemployment is rising more quickly in the West Midlands than in other areas. This is due to its relatively large industrial sector. The Labour Force Survey shows that the percentage of the regional labour pool unemployed in the first quarter of 2008 was 6.2 per cent, rising to 10.6 per cent by the second quarter of 2009. The survey predicts it will reach a rate of around 13 per cent in the fourth quarter of 2010.
Whether AWM will be around to influence things much beyond next summer is unknown, of course. The Conservatives remain favourites to win next year’s general election and are no fans of regional development agencies. But whoever has to tackle problems within the regional economy will have their work cut out. AWM – like other agencies – has been instructed by the government to put its efforts into business support, and while there hasn’t been the collapse in the area’s manufacturing sector predicted in the first part of this year, there have been prominent business failures such as van maker LDV. And with Jaguar Land Rover recently announcing it will be closing down either its Castle Bromwich or Solihull plant in the relatively near future, the outlook is fairly gloomy.
But attempts to broaden the economic base are taking shape via initiatives such as Wolverhampton Science Park and the Central Technology Belt linking Birmingham and Malvern, and through the industry collaboration work of business-savvy universities such as Warwick and Birmingham.
And there are some positive signs for the West Midlands economy as a whole. Research conducted by Yorkshire Bank shows the majority of Midlands businesses expect to see the economy grow within 18 months, while the Markit West Midlands PMI survey signalled output growth in the region’s private sector economy for a third successive month in September. The rate of expansion was the fastest recorded since October 2007.
The amount of regeneration work in the pipeline will also provide hope for the future. Many major schemes have been mothballed but they haven’t been abandoned. If just half of the proposed regeneration schemes get the go ahead over the next few years, the West Midlands will be able to offer a plethora of options to inward investors looking to locate in a forward-thinking local economy.
Andy Coyne
Editor of Midlands Business Insider