District Matters

Deepest recession in 300 years

February 2021

We have just had the figures released that confirm we have had the deepest recession in 300 years. Whilst people will have noticed the impact of the restrictions due to Covid-19, the economic consequences may not have impacted. The reason for this is simple, the UK government will have borrowed over £400 billion in 2020/21 and pushed government debt to over £2.1 trillion. Almost everything that could be subsidised has been subsidised, despite this, many people have fallen through the cracks.

When the subsidies end, and they will end, expecting them to be permanent is a fantasy, then a very different picture will emerge. There will be very clear ‘winners' and equally clear ‘losers'. An over simplification would be that the winners will be those people in professional jobs who can work from home and pensioners, particularly those on index linked final salary pension schemes. The losers are likely to be those whose jobs require face-to-face contact and the young who find opportunities much reduced.

Across our District both categories are well represented, we have many people who are professional and many people who are retired. However, the industries worst hit by the pandemic are those in the service sector, hospitality, retail, arts and entertainment. There are many jobs in our District dependent on those industries and this is manifest in the figures for unemployment, now over 5,000 and those on furlough, now around 8,000.

Recovery in these industries will be far from swift, tourism, one of the main drivers of activity in these sectors will take time to recover. Indeed many commentators expect that, as government support is withdrawn many companies that have been kept on life support will sadly just disappear. I have seen estimates as high as 1 in 7 and I'm afraid that things could get worse before they get better.

I am already beginning to detect some resentment by the ‘losers' against those they see as protected. This is low key and not yet widespread, but it could easily grow. This is one of the main reasons I am focussing a lot of time and effort on economic regeneration and also looking at ways to create a level playing field in terms of fairness.

One of the things that I find surprising is how many people seem to think that economic growth just happens and we do not need to work at it. There also appears to be a view that it is not a major agenda item. I think people need to be very clear that without economic growth, the jobs and prosperity it brings, the choices we would have to make as a society would become much more constricted and much starker. I suspect that many of the people would not want to have to make stark choices.

We have, at the moment, three exciting projects underway which are designed to help the economic regeneration of our District, create jobs and help the High Street recover. To illustrate how long it can take to bring these projects to fruition we have been working on one of them for almost three years.

One of the other factors that surprises me is how many residents, particularly of Stratford-upon-Avon itself appear to resent tourists. This is a tourist town; tourism is our second biggest industry, worth £500 million a year in normal times. It supports about 9,000 jobs, so is not surprising 8,000 people are furloughed. It enables us to have a retail offering and a choice of restaurants and facilities that would not normally be found in a town of this size. Without tourists our prosperity would be much diminished.

I sometimes get a sense that far too many people think we can have it all. That is a nice fantasy and in the past year that fantasy has been underpinned by the government borrowing £400 billion and providing an immense amount of support to a great many individuals and businesses. As a Council we have paid out well over £40 million to local businesses which has provided an invaluable lifeline.

We are now reaching a point in time where we will have to start thinking about all members of society and how we create a future where there are not 5,000 unemployed and 8,000 people on furlough. However, the success of the incredible vaccine rollout across our District and further afield is starting to give us hope of some return to normality ahead, but with it is likely to come a reduction in government support which will bring a new set of challenges we will need to face to ensure our District recovers for the benefit of everyone.