The West Midlands’ economy is expected to shrink by 10.6 per cent in 2020 as it battles the ongoing impact of coronavirus, according to new research.
It is a further slip after financial services firm KPMG predicted the region’s economy would fall by 9.1 per cent in its last quarterly Economic Outlook report, published in June.
The publication did however predict an upturn next year as advances in the development of a vaccine would see the pandemic under control by mid-2021.
Growth in the West Midlands is expected to pick up to 8.9 per cent next year if a vaccine is rolled out by April, with the economy reaching pre-covid levels by early 2023, KPMG said.
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The firm said its latest forecasting model suggested Stratford-upon-Avon and North Warwickshire would be hit hardest among the West Midlands’ districts, with drops in GVA of 14.4 per cent and 12.7 per cent respectively.
Meanwhile, the Malvern Hills area looks set to face the lowest impact, with a reduction in GVA of 8.3 per cent, the report suggests.
UK-wide, KPMG is forecasting GDP decline of 10.3 per cent for 2020, downgraded from 7.2 per cent predicted in June, with growth of 8.4 per cent in 2021.
Karl Edge, Birmingham office senior partner and Midlands regional chairman at KPMG, said: “Our latest revised forecasts highlight the scale of uncertainty facing both the region and country over the coming months.
“As businesses, students and residents continue to adapt to the new normal and look towards recovery, the next six months will be challenging as the potential of a hard Brexit also looms.
“The Midlands has seen its fair share of challenging times and, as a region, it has shown strength and resilience.
“Key to its recovery will be collaboration and truly supportive and focused efforts from businesses, local government and the wider community.
“With vaccine research well under way, focusing on the West Midlands recovery plan to restore confidence and long-term sustainable economic growth will be vital, as well as regaining the growing momentum the Midlands had started to develop.”