Weak cash flow, high levels of debt and major labour market risks are on the horizon for Birmingham businesses, according to a major new economic report. The Birmingham Economic Review
, published by Greater Birmingham Chambers of Commerce (GBCC) and the University of Birmingham’s City-REDI, reveals the city will continue to battle a number of economic and social challenges through the Covid-19 pandemic and in the aftermath.
According to the report, 47% of Greater Birmingham businesses reported a worsening cashflow position in Q3 2020, suggesting a significant proportion have little financial “buffer” remaining to absorb any further shocks.
Meanwhile, 8% of West Midlands’ businesses took out Coronavirus Business Interruption Loans, worth £871.4 million according to the British Business Bank statistics in the economic review.
Alongside its debt and weak cashflow woes, the Birmingham City Council region also experienced the highest number of employees being placed on furlough in the country, at 156,300 – more than a quarter of jobs.
Adding further to the bleak economic outlook, the West Midlands experienced the second largest decrease in jobs of any region.
However, despite the sombre statistics, leaders remain optimistic for the city’s future. The report says that opportunities such as HS2 and the Commonwealth Games will help restore the region’s visitor economy.
Paul Faulkner, chief executive of Greater Birmingham Chambers of Commerce, said: “This year’s Birmingham Economic Review is very different to the last.
“While previous years have focused on the remarkable renaissance that the city has experienced in recent times, this year reflects the significant impact that Covid-19 is wreaking on the economy.
“It is clear that what lies ahead for Birmingham, as with most other parts of the country, is a tough road full of challenges, but also opportunity to grow and evolve post-Covid-19.”
He added: “Despite what might be perceived as a sense of gloominess associated with this year’s Birmingham Economic Review, I am confident that the city can prosper and adapt out of these challenging circumstances, and emerge stronger than ever.”
Professor Simon Collinson, deputy pro-vice-chancellor for regional engagement and director of the West Midlands Regional Economic Development Institute (WM REDI) and City-REDI at the University of Birmingham, said: “Our city-region was enjoying a genuine renaissance before March, increasingly recognised as a desirable place to live and work. But we are now among the hardest hit by the dual shocks of Brexit and Covid-19.
“Through our data and analysis, we map the monumental changes we have witnessed over the past year; ‘before Covid’ and ‘during Covid,’ and look ahead to what must be a brighter future.”