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 and out of the Covid-19 pandemic.
The report reviews Birmingham’s economic landscape, before and during the health crisis, as well as what lies ahead for the city.
According to the report, across Greater Birmingham 47 per cent of businesses reported a worsening cash flow position in Q3 2020, suggesting a significant proportion of businesses have little financial “buffer? remaining to absorb any further shocks.
Eight per cent of the West Midlands’ businesses received a share of Coronavirus Business Interruption Loans, worth £871.4million according to the British Business Bank statistics in the economic review.
Alongside its debt and weak cash flow woes, the Birmingham City Council region 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 jobs outlook, the West Midlands experienced the second largest decrease in workforce jobs of any region.
Despite the sombre results of the report, leaders remain optimistic for the city’s future.
It says that opportunities such as HS2 and the Commonwealth Games will present supply chain business and help restore 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 is wreaking on our 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 past the Covid crisis.
“Despite what might be perceived as a sense of gloominess associated with this year’s Birmingham Economic Review, I’m 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 amongst the hardest hit by the dual shocks of Brexit and Covid.
“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.’
To read the report in full.