• Where do East and West Midlands unite in approach to business recovery?

Where do East and West Midlands unite in approach to business recovery?

17 September 2020

When it comes to football, the rivalries between East and West Midlands clubs are nothing short of complex. Nottingham Forest don’t like Derby and Wolves and West Brom have never been the best of friends. Shall we mention Aston Villa? The competition between teams up and down the leagues is fierce.

While sporting differences are so deep rooted that there will always be a divide, the same cannot be said for businesses that sit either side of the border, particularly when it comes to their response to the COVID-19 pandemic. While business leaders may sport different colours football-wise, their confidence in the resilience of the region and the UK’s economy over the next 12 months is markedly united. In fact, combined, the two take a much more positive approach than seen nationally, where confidence levels sit at 29%. This compares to 40% for East Midlands companies and 50% for West. It’s no surprise that both back their own region, in terms of durability, and each show similar confidence in their own businesses.

Our monthly Rethinking the Economy survey of 500 mid-sized businesses further proves that the Midlands as a whole is largely in sync when it comes to sentiments towards and actions from COVID-19, further contradicting the long-held sporting rivalries. In fact, in certain instances it’s very hard to separate them. Both East and West Midlands businesses have furloughed and made a similar number of people redundant during the pandemic, in line with the national average, but each rank the wellbeing and safety of employees as their biggest operational concern (63%).

Despite confidence when it comes to the resilience of the region, businesses and the UK economy, they both take a more cautious approach in terms of the length of recovery. According to our poll, 40% and 37% respectively believe it will take a slow ‘two-year grind’ to get back to pre-COVID levels of activity. While a similar number of businesses are currently trying to safeguard their business, it’s here that we start to see a small divide and changing attitudes. Where the West is more bullish, with 40% of respondents saying they are succeeding in the ‘new reality’, only 17% of East Midlands businesses feel the same, with 53% admitting that they’re just keeping the business running in the new climate.

There’s no avoiding that the challenges and impacts of the pandemic are still very real and far from over. What is reassuring at this time, is those which have maintained or experienced a rise in revenues. This better places companies to bounce back from the impacts of COVID-19 and reduce the potential for large-scale job losses and declines in revenue.

When you flip the issue of job losses and look within at the skills of employees, and their ability to help drive a business forward, it’s interesting to see how the two regions differ in their view of their current workforce. East Midlands businesses are resounding – 80% back their team, compared to 60% in the West. What’s particularly intriguing is their approach to ensure the skills of employees are at the desired level to meet current and future challenges. The West Midlands leans strongly towards links with education, succession planning and investment in training and development, while the East also sees the answers in strategic hires and M&A activity.

Even before the coronavirus pandemic, The West Midlands Strategic Economic Plan set out a long-term ambition for the region. The Regional Skills Plan details how the West Midlands Combined Authority (WMCA), working with key partners, will prioritise actions to deliver on that ambition. Its focus is on securing stronger and more inclusive regional growth. Put simply, the WMCA wants to deliver a better match between the skills of the people in the region and the current and future needs of businesses, to accelerate productivity and deliver economic growth. According to the combined authority, if the skills profile of the area matched the England average, annual GVA in the area would increase by around £22 billion.

The problem of skills is equally felt across the border and one that has plagued businesses for many years. Whether the answer lies in training, external advisors, or creating new roles, it’s clear that the unified confidence and belief that the Midlands as a whole can weather the COVID storm will guide businesses through the most uncertain of times.

If you’d like to discuss the regional outlook further, or you’d like to find out how BDO can help your business ‘rethink’ their future strategy, simply contact me or call 0121 352 6200.