Recovery from the recession remains fragile in the West Midlands

According to recent research by the Observatory, recovery from the recession has been fragile. After rising in the second half of 2009, recruitment activity faltered in the early months of 2010.

Geographically, the areas expected to experience the most fragile economic recovery in terms of growth in GVA and jobs are traditional industrial areas, such as the Black Country and Stoke-on-Trent. These areas have historically been dependent on industries such as engineering, manufacturing and construction.

Recovery is expected to be strongest in areas clustered in the south and east of the West Midlands, in Solihull and Warwickshire. These areas benefit from a strong presence of high value added knowledge-based industries,  good communication links and environmental quality.

The pace of economic growth in the West Midlands over the next five years (2010–2015) is forecast to be modest. GVA is forecast to grow by 11% (£9 billion) over the period. This compares with growth of 15% (£11 billion) between 2000–2007.

In terms of employment, at 5% over the period (representing the creation of 11,000 net new jobs) employment growth is forecast to be similarly modest. Again, the pace is expected to be strongest in higher value added activities.

Job shedding is also forecast to continue in traditional private sector industries (such as engineering and manufacturing) and the public sector.

However, to boost the scale and pace of economic recovery in the West Midlands, create more jobs and stimulate more demand for higher level skills, there’s a need to upskill the workforce in existing buisnesses to improve their productivity and help them exploit new market opportunities.

Also, it will be important to attract more businesses and jobs in higher skilled and value added clusters (such as environmental technologies, medical technologies and ICT) to the West Midlands.

Read more about the future of the West Midlands economy in our report:

• The West Midlands economy post recession: key issues and challenges (pdf, 844kb)
• Dataset: XLS, 136kb | Available on Google Docs