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October 26, 2020

Political battles between Westminster and the regions are set to intensify as new restrictions are expected to lead to more job losses in Wales and in the North over the winter

On 14 October, a new three-tiered coronavirus system came into effect in England, placing areas in one of three risk categories: medium, high or very high. Most of the country is still in the lowest tier, while London, Essex, and various other parts of the country from Northumberland to Nottinghamshire have been placed in the ‘high’ risk category. Greater Manchester joined the Liverpool City Region, Lancashire and South Yorkshire in the ’very high’ category today, as Wales also enters a 17-day lockdown. The higher the risk category, the more drastic the lockdown restrictions, with the highest tier requiring pubs and bars to close unless they serve main meals.

 

The new system pays tribute to the regional variation in infection rates. However, the regional variations in coronavirus restriction also imply that the economic pain of fighting the pandemic is felt unequally across the country, as demonstrated by the skirmishes between local leaders in the North and central government over the last weeks.

 

Cebr has analysed claimant count data to understand how varying lockdown levels are affecting job markets across regions. The ONS calculates the claimant count by adding “searching for work” Universal Credit claimants and Jobseeker’s Allowance claimants. While it is not a precise measure of unemployment it is nevertheless, a useful indicator because it is updated more regularly than other labour market data.

 

When we look at the regions of Britain which have seen the largest rise in the share of the population on the claimant count between February and September this year, London comes top with a 5.0 percentage point rise to stand at 8.0%. Outside London, the five regions of Britain to have seen the largest rise in the share of the population on the claimant count have seen far higher coronavirus infection rates, of 1,700 per 100,000 people taking a simple average across the regions. This compares to an average infection rate of 1,060 for the lower half of British regions by rise in the claimant count population share.

 

The West Midlands and North West have seen the largest rises in the share of the population on the claimant count after the capital. The West Midlands has a significantly sized manufacturing industry, that has been hard-hit by the pandemic, resulting in job-losses. Birmingham, the region’s largest city, has also seen tighter restrictions than other areas since late August. Meanwhile, the North West has seen one of the strictest lockdowns in the country since late July. This will have resulted in many job losses at businesses which have seen a demand crunch in reaction to restrictions.

 

At the other end of the spectrum, the East of England and South West have seen the lowest coronavirus infection rates and smallest rises in the claimant count share of the population.

 

As more local areas face the threat of being placed in higher tiers, meaning more and more households face tighter controls on their economic activity, there will be a direct impact on joblessness. Yesterday’s announcement from the Chancellor to increase support for businesses in Tier 2 lockdown regions and to make the Job Support Scheme more generous was a welcome move to help businesses in the most affected parts of the country. Nonetheless, the pandemic is having serious consequences for regional labour market differences, and a further divergence in economic performance across areas of Britain is likely in the months ahead, as businesses in some regions can operate somewhat normally, while others are stifled.

 

 

Contact: Josie Dent jdent@cebr.com phone: 020 7324 28464

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