Economic growth already slowing in Greater Manchester before latest Covid measures, warns survey of city-region businesses

The rate of economic growth began slowing down in Greater Manchester in October and November according to data collected in the Greater Manchester Chamber of Commerce (GMCC) Quarterly Economic Survey.

While the survey of 337 businesses across the city-region showed a boost to international trade as exporters continue to adapt to new regulations now that the UK is outside of the European Union. Improvements in international sales, however, were balanced out by a decline in domestic sales over the last three months.

Subrahmaniam Krishnan-Harihara, Head of Research at GMCC, who led the study, said more emphasis was needed on supporting B2B organisations, with consumer spending currently the driving force in the local economy, and warned that the imposition of new Covid restrictions could hit the economy further. He commented:

“After strong economic performance in Q2 and Q3, growth had started softening even before the new set of Omicron restrictions were imposed. Our view has been that consumer spending in B2C services contributed significantly to economic growth in 2021. Business investment is lagging behind, and this is a serious ongoing concern.

“We know that the restrictions imposed recently have hit hospitality businesses hard. The worst affected sectors of retail, hospitality and leisure recorded strong growth in October and November but that has been derailed now. It is also possible that consumer spending will decrease after the festive season. The combination of these impacts could lead to a further reduction in economic activity in the new year.”

Businesses in the region have also continued to feel pressure from recruitment challenges and labour shortages: while over half of the respondents to the Quarterly Economic Survey had actively attempted to recruit, three-quarters faced severe difficulties in doing so.

In response to recruitment challenges in the city-region, GMCC has partnered with the Greater Manchester Learning Provider Network to to develop the GM Business, Employment Skills and Training (GM BEST) Monitor, a detailed exploration of hiring difficulties across all sectors.

Commenting on the GM BEST Monitor results, Subrahmaniam added:

“The acute shortage in labour is a worry for businesses as it increases competition for talent and fuels wage inflation. The combined impact of Covid-19 and Brexit has caused both short-term labour shortages and long-term structural changes in the labour market. There are other long-standing skills and training challenges that businesses in Greater Manchester face. For example, the number one reason for recruitment difficulties is the lack of job specific technical skills. Businesses also report that the lack of soft skills is a barrier to recruiting the right people. However, the skills deficits in different sectors and in different parts of Greater Manchester are different. The GM BEST results shines a light on skills mismatches and the scale of the reskilling and upskilling challenge. This collaborative research lays the foundation for localised, place-based skills planning in the city region.”

The latest Quarterly Economic Survey and GM BEST Monitor results are available to download and read in full from the GMCC website.