South East: Regional economy losing £400m a day

A new report has revealed the daily impact of the coronavirus lockdown on the South East economy and highlighted which sectors are performing the strongest and protecting the UK from even greater damage.

According to UK Powerhouse, a report by Irwin Mitchell and the Centre for Economic and Business Research (Cebr), GVA* is estimated to be falling in the region by 35% or £393 million a day during the lockdown.

The report says that although the total of 35% of GVA per day is significant, it is one of the regions faring better, with only London retaining more of its GVA per day.

According to the report, the resilience of the economy can be traced to the professional services sector and the ability of many to work remotely.

One of the major sectors of the South East economy is wholesale and retail trade. Before the lockdown, it produced £135m of GVA per day. This is the sector that saw a significant surge in food retail at the outset of the lockdown due to panic buying, however, the sector has since stabilised. Overall, the sector is facing a loss of GVA per day of £85m, equivalent to 63%. Many non-essential retail outlets have stopped trading under lockdown, with only online retail and essential retail continuing. Online retail only accounts for about 19% of total sales and hence cannot fully recover lost in-store non-food retail.

This fall in consumer demand has inevitably had an impact on the manufacturing sector, which acts as a key supply-chain input. GVA per day in the sector has fallen by 81% relative to pre-lockdown levels. This is equivalent to £75m less GVA per day and is the second largest absolute loss for the region behind wholesale and retail.

GVA loss per day across the UK regions

Region Total Loss per day £m Total % Loss
London 575 27.7%
South East 393 34.7%
South West 185 36.3%
East of England 241 35.5%
East Midlands 164 39.7%
West Midlands 245 39.5%
North West 279 36.7%
North East 71 34.3%
Yorkshire and the Humber 170 36.6%
England 2,323 33.9%
Scotland 214 35.7%
Wales 79 36.5%
Northern Ireland 49 38.4%
UK 2,665 34.1%

Source: ONS, Labour Force Survey, BRES, Cebr analysis

 Despite claiming that the UK economy is losing £2.7 billion a day in absolute terms, the report says some sectors such as agricultural, forestry and fishing, along with the information and communication sector, have remained strong with a relatively low daily GVA fall of 14% and 2% respectively.

It adds that a national 1.3% rise in the share of the workforce mainly working from home over the past five years puts the UK economy in a more resilient position in terms of share of people able to work remotely.

The report said that the South East leads the way when it comes to working from home with a 1.8% increase since, taking the total proportion to 7.1% of employees. For these people, it is likely that their ability to work from home will continue on a fairly usual basis. Furthermore, they would have been well set up at the start of the lockdown, as they already had the space and equipment to work from home.

Victoria Brackett, CEO of Irwin Mitchell’s Business Services division, said: “Although in absolute terms the South East economy is losing almost £400m a day, in relative terms it has fared better than many regions in the UK.

“One of the reasons for this is that the region has the highest share of the workforce that worked from home before the virus started spreading. For these people, it is likely that their ability to work from home will continue on a fairly usual basis. Furthermore, they would have been well set up at the start of the lockdown, as they already had the space and equipment to work from home.”