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Cities worst hit by COVID-19 set to make faster economic recovery, according to Demos-PwC Good Growth for Cities report


  • Good Growth for Cities report predicts cities in Wales to have stronger recovery rates than cities in the West of England. 

  • Average annual growth rates in 2021 for cities in the combined West & Wales region is 4.5%, with the index average at 4.6%.

  • 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.

Cities and towns hardest hit during the pandemic, such as Bradford, Liverpool and Southend have seen their economies decrease by more than 12.5% in 2020, yet are among those with the strongest projected GVA growth rates for 2021. These cities are predicted to recover faster than others in 2021, with growth rates of 5.3% and higher. 

For cities in the West & Wales region, the average annual economic impact is 10.4% in 2020, compared to 11% for the UK overall. But that also means that predictions on recovery for those cities are lower compared with other regions in the UK, at 4.5%. After taking larger economic hits in 2020, Cardiff and Swansea are likely to see bigger recoveries than Bristol and Swindon this year.

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.

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. 

Impact on the West and Wales 

  • The average annual economic impact on cities in the Wales & West region is -10.4% in 2020 (11% for the UK average).

  • Predictions on recovery for cities in the region are lower compared with other regions in the UK. Average annual growth rates in 2021 for cities in the West & Wales region region is 4.5%, with the index average at 4.6%.

  • ~283,000 workers in the region were on the furlough scheme as of 31 October 2020, equivalent to 7.4% of the region’s total labour market.

  • Cardiff and Swansea’s furlough rates are some of the highest in the UK, with furlough rates of 9.3% and 8.8% respectively which is above the UK average rate of 8.1%.

John Paul-Barker, Regional Market Leader for PwC in the West & Wales, commented:

“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 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.

“While the economic hit on cities in the West & Wales has not been as bad as other parts of the UK, our recovery here will be less strong overall. We need an 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.”

Tom Ayerst, PwC’s Market Senior Partner in Bristol, commented:

“The findings highlight the work that needs to be done to kickstart the recovery from the pandemic. While this report - and indeed the pandemic - has revealed the inequality across the UK, it’s not as straightforward as the North-South divide headlines might suggest. There are areas of Bristol and the South West that need to be front and centre of a recovery that works for everyone.

“‘Levelling up’ needs to focus on inequalities within regions as well as between regions. This underscores our position that only a combination of government, business and academia working together can address this challenge. We need to define the strategies that will help businesses and public sector bodies work together to equip people for the future world of work, enhance social mobility and inclusion and help to deliver a low-carbon economy.”

The Demos-PwC Good Growth for Cities Index ranks 42 of the UK’s largest cities based on the public’s assessment of ten 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.

Cities and towns with ‘Good Growth’ are more resilient 

  • Many of the cities that perform well in the Good Growth Index - including the Scottish cities of Edinburgh and Aberdeen, and cities in England such as Norwich, Swindon, Southampton 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. 

  • Many poorer performing cities in the Good Growth Index - including Liverpool, Southend, Medway, Doncaster and Bradford - have been hit hard by the pandemic. These cities have been more exposed to the impacts of COVID-19 and have less resilience in terms of broader economic base and social wellbeing. 

  • An exception to this pattern is Leicester - whilst performing well in the Good Growth Index it will be one of the cities hardest hit economically by the fallout from COVID-19. Leicester was the first city to have stricter restrictions imposed following the relaxing of the initial national lockdown in June 2020. The decreased footfall in Leicester city during the summer period will have further reduced the performance of Leicester’s retail sector. 

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. 

Jonathan House, devolved and local government lead for PwC, said:

“The pandemic 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. Citizens will value different things and those places that meet those needs will be the ones that bounce back quicker.  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.” 

To download the report, visit our Good Growth for Cities pages.

Contact us

Neale Graham

Senior manager, Communications, PwC United Kingdom

Tel: +44 (0)7801 766188

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