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Cities worst hit by COVID-19 set to make faster economic recovery but UK needs to think local to level up, according to Demos-PwC Good Growth for Cities report

  • Hardest hit cities and towns such as Medway and Southend are predicted to recover faster than most others, with growth rates of 5.7% and 5.3% respectively.
  • Norwich, Swindon, Southampton, Portsmouth and Oxford - have been relatively less economically impacted by the pandemic. Their sectoral mix and performance on broader economic and social indicators have to some extent provided resilience. 

  • The average annual economic impact on cities in the South East is -10.47% in 2020, above the UK average of -11.0% in 2020.

  • Good Growth for Cities report calls for the UK’s recovery to look beyond national GDP and double-down on efforts to address the individual socio-economic challenges facing towns and cities to level-up inequalities.  

  • UK’s hardest hit cities and towns are predicted to see some of the fastest growth rates in 2021 but need to embed lessons from the most resilient cities to achieve long term, sustainable growth.

  • Analysis is based on the ‘Gross Value Add’ (GVA) of each local area, reflecting the make-up of local economies, prevalence of different industries, and the impact of the pandemic. 

New analysis in the latest PwC-Demos Good Growth for Cities report shows that the UK cities and towns hardest hit by the economic fallout from the pandemic are likely to make the fastest recovery, but are expected to be worse off than at the beginning of the pandemic compared to more resilient places.

Towns hit hard during the pandemic, such as Medway and Southend have seen their economies decrease by more than 12.7% and below in 2020 yet are projected with strong GVA growth rates for 2021. These towns are predicted to recover more effectively than others in 2021, with growth rates of 5.7% and 5.3% respectively. 

As the business sectors most impacted by restrictions reopen, the cities most negatively affected due to their sectoral mix will see faster recoveries. However, a return to pre-pandemic conditions will not necessarily instigate a dramatic upturn in economic activity and these city economies will still be smaller in 2021 than they were in 2019.

The report highlights the deep-seated challenges facing many of the worst hit towns and cities which in many cases are those traditionally vulnerable to volatile economic performance. 

As the UK looks to ‘build back better’ from the pandemic, ensuring that the recovery lays the foundations for building resilience against future shocks will be vital. Learning and embedding lessons from cities, such as Oxford, Leicester, Leeds and Edinburgh, which have performed more strongly over the longer-term pre-pandemic, in areas such as jobs, health and skills, is key to driving more balanced and sustainable economic growth across the UK.

Norwich, Swindon, Southampton, Portsmouth and Oxford have been relatively less economically impacted by the pandemic. Their sectoral mix and performance on broader economic and social indicators have to some extent provided resilience. 

With around a quarter of Reading’s economy being in the Information & Communications sector it is clear why the city is expected to be less affected by the pandemic than most UK cities, as this is a sector that is expected to cope well with the pandemic’s impacts.

It is also notable that Real Estate activities are consistently in the top three sectors for all cities in this region. This sector experiences the third highest annual GVA growth rate of all sectors in 2020, which is one reason why most cities perform relatively well in the South East.

Other key findings show that the South East had some of the lowest rates of workers on the UK Coronavirus Job Retention scheme, with Norwich (5.8%), Medway (6.1%), Oxford (6.3%) and Southampton (6.5%) of its workforce on the scheme during 2020. The UK average take-up rate of the furlough scheme is 8.1%. However, the local authority of Crawley, home to Gatwick Airport, has the highest take-up rate of the UK furlough scheme with 13.2% of Crawley’s workers were on the scheme as of 31 October 2020.

The South East also had some of the lowest take-up rates of Universal Credit, with Southampton (4.7%), Norwich (4.5%), Reading and Cambridge (4.4%), Swindon (4.2%) and Oxford (3.8%) which had the lowest percentage of Universal Credit claimants aged 16 to 64 claiming benefits in November 2020. This compared to Birmingham (8.8%) and London boroughs at (8.3%).

The Good Growth for Cities report calls for a doubling-down on efforts to address structural issues - such as improving local skills, encouraging new business development and addressing local environmental challenges - whilst directing effort and resources to the towns and cities that need them to achieve longer-term sustainable growth. Creating employment opportunities and improving skills levels should be top priorities nationally and locally - particularly for younger people. 

Karen Finlayson, regional lead for government and health industries at PwC, said: 

“The pandemic has made us more acutely aware of existing economic and social inequalities and why it is so important to ‘level up’ across the UK. It reinforces our view in Good Growth for Cities of the necessity to look beyond GDP and headlines about the North-South divide to focus efforts on tackling the issues that really matter to the public - and local economies - such as skills, sustainable income and health and wellbeing.

“A broad-brush approach to levelling-up will not address the challenges facing the places that have been hardest hit. We need a precise approach which takes into account the strengths and needs of individual towns and cities to build more resilience and drive a fair recovery across the UK. Given continued uncertainties, particularly with the post EU trading environment and unknowns around pandemic recovery, action is required so that levelling up is a reality not an unattainable aspiration.” 

The Demos-PwC Good Growth for Cities Index ranks 42 of the UK’s largest cities based on the public’s assessment of 10 key economic wellbeing factors, including jobs, health, income and skills, as well as work-life balance, house affordability, travel-to-work times, income equality, environment and business start-ups. PwC’s GVA analysis took into account a city’s sectoral make-up, the impact of the use of the furlough scheme to protect jobs, and rates of Universal Credit claims, Covid infection and mobility rates to project GVA growth rates for 2020 and 2021.

New opportunities 

With more people working from home, towns and cities have new opportunities to build virtual connections and play to their strengths in terms of liveability, affordability and community. There is still much uncertainty over how these trends will play out in the long-term, however a move to hybrid home and office working does have the potential to level up certain areas of the country. PwC research shows that areas that could benefit from a shift to working from home include outer London and smaller cities like Wigan, Bradford and Blackpool. 

Keith Harrington, Regional Market Leader for the South East commented:

“As a whole, cities across the South East performed particularly strongly in key variables such as income, where all cities in the region, bar Norwich scored above average. There was also positive news around health and environment where all cities in the South East scored above the UK average. There is, however, a price for this success, with all cities in the region scoring below average in housing price to earnings and at or below average for work-life balance with the exception of Brighton. 

We can’t lose sight of the impact Covid has had on the region that said it is pleasing to see that the South East has some of the lowest rates of workers on the UK Coronavirus Job Retention scheme and  some of the lowest take-up rates of Universal Credit. 

The pandemnic has led to people living their life much closer to home and the likelihood is some of these lifestyle changes will stay for the medium-term. This opens up opportunities for places that have advantages in terms of liveability and community, and where ‘price of success’ factors, such as housing affordability, are less of an issue. The report sets out a series of recommendations for leaders from across national and local government, as well as the private and third sectors, as they plan their recovery strategies. This includes taking a broad approach to economic wellbeing and building resilience will be essential to create liveable vibrant places where people want to live, work and visit.” 



  • The Demos-PwC Good Growth for Cities Index was established in 2012 and is updated annually. 

  • The Index looks beyond GDP and covers broad measures of economic wellbeing, including jobs, income, health, skills, work-life balance, housing, transport and the environment. The index measures the performance of 42 of the UK’s largest cities, England’s Local Enterprise Partnerships (LEPs) and ten Combined Authorities, against a basket of ten factors which the public think are most important when it comes to economic well-being. These include jobs, health, income and skills, as well as work-life balance, house-affordability, travel-to-work times, income equality, environment and business start-ups.

  • Our Index tracks the factors that the public consider most important to their economic wellbeing. These factors have stayed largely consistent over the years, and perhaps surprisingly, have remained largely consistent across 2020 too. Health, jobs, housing and income are ranked as the most important of our 10 economic and social factors, followed by skills, the environment, transport, income distribution, work-life balance and business start-ups.

  • More details on the methodology can be found here

  • The report includes recommendations for how central government, local leaders and business can each support an effective and fair recovery. Some of these include: 

  • For central government: 

To deliver on ‘levelling up’ central government must take the opportunity to reassess its priorities and how it focuses efforts and resources on shaping the recovery, delivering good growth across the UK and addressing inequalities, looking at age, gender and ethnicity as well as geography.

  • Recommendation: Establish a national outcomes framework, encompassing a broad definition of economic success, that will help deliver targeted interventions and shape a fair recovery.

  • For local leaders: 

For local leaders developing their recovery plans, there is a need to address both how to support longer-term inclusive growth, while creating greater resilience to future global and national challenges. Place-based approaches, solutions and ideas are needed.

  • Recommendation: Set an ambitious strategy for recovery, taking a broad approach that balances productivity and innovation, fairness and equality, environmental sustainability, and resilience.

  • For business: 

Covid-19 has put the role of business leaders in the spotlight, with a refocus on the purpose of business, an increasing emphasis on ESG, and closer collaboration between public and private sectors.

  • Recommendation: Proactively work with local leaders to build innovation and productivity-focused local economic strategies, identifying strategic priorities to boost productivity, support innovation and deliver clean growth.

For further information please contact Duncan Bowker, Senior Regional Communications Manager


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