Midlands and Northern England communities face ‘economic scarring’

‘Red Wall’ communties in the Midlands and the North of England could face ‘economic scarring’ as a result of the coronavirus pandemic, a new report has warned.

The report by the Centre for Progressive Policy warns those areas, which proved to be key battleground areas in the 2019 generation election, could suffer permanent economic losses, as a result of the pandemic.

It claims the so-called ‘Red Wall’ communities are projected to see an average fall of 12 per cent in permanent losses in economic output over the next five years, which is well over the national average (8%).

It is also more than double the average projected losses in regions like the South East (5%).

The report also predicts the impact of these losses on earnings will be significant, with average earnings in the 20 poorest local authorities set to fall from £18,580 per annum to £17,340 in real terms in the three years after lockdown.

Even within the most resilient local economies, it predicts earnings will still be lower in real terms in 2027 compared to 2019.

To avoid exacerbating existing regional inequities, the think tank is urging the government to first shore up the worst affected local economies and avoid ‘levelling down’ in some areas.

Secondly, to avoid large permanent losses in some of the country’s most vulnerable places, it must return to a revitalised levelling up agenda.

‘While policymakers are rightly concerned with the immediate economic shock of coronavirus, history has taught us that recessions have deep and long-lasting effects, which are rarely spread evenly across country. This crisis is clearly no different, with those ‘left behind’ areas on course to bear the economic brunt,’ said think tank director, Charlotte Alldritt.

‘The government had already signalled its intent to ‘do right’ by voters who had lent them their vote but these communities have been let down by successive governments in the past. If this administration can fulfil its ambition to level up successfully, it would be righting decades of economic injustice. Covid-19 has made this daunting task even harder, but success is now both a political and economic imperative.’

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