Oxford expected to lead the nation’s post-Covid-19 recovery in 2021

Oxford

A new economic report published today says that Oxford is expected to lead the nation’s post-Covid-19 recovery in 2021 with some of the fastest employment growth in the UK.

The latest UK Powerhouse report from Irwin Mitchell and the Centre for Economic and Business Research (Cebr) reveals that Oxford had the strongest end to 2020 with a three per cent increase in employment.

The report says that this level of employment growth will dip slightly in the 12 months to Q4 2021, but that it will still create 2,200 new jobs.

It adds that Oxford’s dominant life sciences and research sectors, which have seen a rise in funding amid the coronavirus pandemic, has been an important boost for the local economy.

Oxford is also ranked 8th out of the top 50 cities surveyed for GVA* with a 7.1 per cent growth during 2021. Compared to the end of 2020, Oxford’s economy will be £1.4 billion larger by Q4 2021.

According to the report, Oxford’s strong performance is not replicated across the UK with only 36 per cent of cities in the report expected to increase employment levels in Q4 2021. 

UK Powerhouse makes a number of recommendations to tackle the difficulties business will face coming out of lockdown. These include the need to take advantage of policies to encourage investment and improve skills and local government having bespoke plans in place to support job creation heading out of the Covid-19 crisis, when the furlough scheme ends. 

Vicky Brackett, partner and Head of Irwin Mitchell’s business division, said: “Similar to all other towns and cities in the report, Oxford suffered a contraction in the size of its economy during 2020. It has recovered very strongly however and by the end of 2021, it is expected to be in the top 10 for GVA growth and job creation.

“Oxford cannot afford to be complacent though. With the impact of the end of the furlough scheme expected to have a negative impact on employment, it is clear that local plans for job creation need to be in place before October.

“It is also clear that a resolution to some of the outstanding issues surrounding Brexit can only have a positive impact on the future outlook. Supporting those SMEs in the region who export to the EU will not only enhance the economic output, but can also make a positive contribution to the local jobs market.” 

More broadly, the report reveals that the UK economy grew by one per cent in the fourth quarter of 2020. This performance marked a substantial slowdown from the 16.1 per cent growth rate witnessed in Q3. But it meant that the UK economy avoided a double dip in the final months of the year.

This takes GDP for the whole of 2020 to a level 9.9 per cent lower than in 2019, marking the worst year-on-year performance since official records began.

However, a further contraction was avoided in Q4, given the prevalence of restriction measures during the quarter, including the second nationwide lockdown. Though output suffered a lockdown-induced dip in November, higher levels of output in October and December were more than sufficient to offset this.

But there’s a large variation in the performance of the sectors. While the services sector saw quarterly growth of 0.6 per cent in Q4, subsectors within it witnessed large-scale contractions. This was most evident in the accommodation & food services sector, where a whopping 32.8 per cent quarterly contraction acted as a significant drag on total output growth.

Meanwhile, manufacturing saw strong performance, with 3.3 per cent quarterly growth, and the construction sector, with 4.6 per cent growth compared to Q3. The subsector of new-build private housing saw a particularly large uptick, of 6.7 per cent, reflecting the continuing boom in the wider housing market.

In comparison with similar economies, these figures suggest the UK was a relatively strong performer at the end of 2020. For instance, the Eurozone saw a contraction of 0.7 per cent in Q4, according to estimates from Eurostat.