What is the likely economic fallout from the COVID-19 crisis, and how will this play out across the country? While this is difficult to answer currently, looking at which sectors are most likely to be affected (or indeed benefit), and where they are located, gives a sense of the likely geographic impact.
The following analysis looks at the geographic spread of the jobs predicted to be the most and least affected in the short- to medium-term and which places are expected to bounce back more quickly.
There is no clear geography to the potential economic impacts of COVID-19
In the short to medium term, around a third of the jobs in cities and large towns are in industries that are expected to be severely affected. Figure 1 shows cities ranked by the estimated vulnerability of their economy to the direct economic impact of COVID-19 given their industrial structure. There are a number of points to note.
Firstly, every city has at least one in five jobs classified as either vulnerable or very vulnerable (shown by the magenta bars). This is because of the impact of the Government’s lockdown restrictions on local services businesses, such as retailers, restaurants and hairdressers. These businesses can be found across cities, whether they are greasy spoons or a restaurant in the Ritz, and the impact is uniform – many have had to temporarily close. Jobs in these local services businesses make up two thirds of all jobs estimated to be vulnerable or very vulnerable.
Secondly, there is no particular geography to the most or least affected cities. Crawley is estimated to be the most exposed, with over half of its jobs either in vulnerable or very vulnerable sectors. It is followed by Luton and Derby. The least exposed cities are the southern cities of Oxford and Worthing but also the northern city of Bradford (shown by the light and dark green bars).
The distinction across cities results from the exposure of their ‘exporting’ industries – that is those that serve regional, national or international markets, in contrast to local services businesses – to the crisis.
Crawley for instance – the most vulnerable city or large town according to our classification – has the highest share of employees in the aviation and aircraft manufacturing industry of any city. Around 18 per cent of its workforce is employed in the aviation industry and related sectors compared to an average of around 1 per cent across British cities. The result is that over half of all of Crawley’s jobs are at risk of being either furloughed or lost completely.
Luton and Derby also have high shares of employees in the aviation industries and employ more people in the automotive sector than in other parts of the country. The result is that just over 40 per cent of jobs are classed as vulnerable according to the methodology, placing them second and third respectively in the list.
Aberdeen’s industry in contrast is largely dominated by the oil and gas sector, which is also expected to suffer particularly from the current crisis. Around 11 per cent of Aberdeen’s employees are employed in this sector compared to the British average of less than 1 per cent.
 The methodology can be found in the info box at the end.
Figure 1: Estimated share of jobs exposed to the immediate effects of COVID-19
Source: BRES, Employment Count, 2018
This has implications for how quickly cities are likely to bounce back after the crisis. Exporting industries bring money into a local economy and are the engines for their growth. If a city’s exporting base comes through the crisis relatively unscathed, this puts it in a good position to grow once more, while creating demand for the local services businesses that have had to close or severely limit their operations during the crisis. This in turn puts them in a stronger position to bounce back.
One way to assess the potential resilience of a city – assuming lockdown will be fairly short lived – is to look at the extent to which its exporting base might be expected to be affected by the crisis. The vertical axis of Figure 2 shows the differences in exposure to COVID-19 from Figure 1 (the magenta bars). The horizontal axis shows the affected jobs in the exporting industry as a share of all exporting jobs of a city. The higher the value, the more affected the exporting base of a city and the more difficult it is likely to be for a place to recover.
Following the above, Crawley, Luton, Derby and Aberdeen might be expected to face the most severe challenges to recover. All have more than half of their exporting jobs at risk.
But there are also distinctions between places that have similar numbers of jobs as a result of the crisis. Two examples are Plymouth and Milton Keynes. They have around a third of all jobs vulnerable or very vulnerable to the downturn. But looking at the exposure of their exporting businesses shows that over half of Plymouth’s exporting jobs are exposed in addition to its local services jobs. Milton Keynes on the other hand may have 80 per cent of its exporting base still operating. And this is likely to allow it to bounce back more quickly.
Figure 2: Estimated share of total exporting jobs exposed to the crisis
Source: BRES, Employment Count, 2018
This analysis shows two things. The first is that the Government’s national schemes – such as the Jobs Retention Scheme or the Business Interruption Loan Scheme – will be drawn down to a much greater extent in some parts of the country than others (noting the latter will depend on awareness of the scheme amongst businesses as well as need).
The second is that, when the crisis passes, different approaches will be required in different parts of the country. In cities where export jobs have not been acutely affected, support should focus on helping local services businesses to find their feet again and serve the demand that should return. But in cities where the export base is more exposed, more sustained support will be required. Centre for Cities will set out in the coming weeks what this support should look like.