North East Devolution and Levelling Up

North East Cities Show COVID Resilience, But Face Tough Times Ahead

Sunderland and Newcastle have weathered the economic effects of Covid-19 better than most other UK cities, but face a tough year ahead, according to a new report . 

While all 50 cities tracked in the UK Powerhouse report from IrwinMitchell and the Centre for Economic and Business Research (CEBR) saw economic output, measured by gross value added (GVA), fall in the fourth quarter of 2020 compared with a year earlier, Sunderland saw the smallest reduction of only 5.0%.   

Newcastle’s performance on the same measure was less impressive, with a 7.0% fall putting it in 41st position. 

However, both cities were high up the table for jobs. Sunderland’s performance was third, behind only Oxford and Cambridge, with an increase of 0.4% in its employment level and Newcastle was fourth with a decrease of 0.2%. 

The IrwinMitchell-CEBR report explains: ‘[Sunderland’s] large manufacturing sector makes up 16% of the economy, and these businesses weren’t prevented from being open in Q4. This means that this sector didn’t see the limits on economic activity that many enterprises in the services sector did. 

‘Nearly a third (29%) of jobs in Sunderland are in the public sector, which have largely been protected from the economic fallout of the crisis’. 

Challenges

Looking ahead to the post-coronavirus recovery, however, both North East cities face tough challenges. In the fourth quarter of 2021 Newcastle is expected to see year-on-year growth in GVA of 6.3%, placing it 31st of the 50 cities tracked, and Sunderland to be placed 48th, with growth of 5.7%. 

The jobs position in both cities is expected to deteriorate, with Newcastle’s employment level falling 0.9%, placing it 32nd in the table, and Sunderland’s falling 1.1%, placing it 39th

This means that by the fourth quarter of this year Sunderland will have lost 1,100 of the 127,900 jobs it had in October-December 2020 and Newcastle will have lost 2,100 of its 203,800. 

The IrwinMitchell-CEBR report’s finding that Sunderland and Newcastle’s employment levels have held up comparatively well during the pandemic is consistent with that of the Centre for Cities, reported on this site in January, that the Covid-19 pandemic has hit some previously economically successful parts of Britain hard, including London (Archive: Covid brings new levelling up challenge – report). The implication is that in the recovery period the North East will face new competition for levelling-up resources from previously prosperous places.