Supporting Data

Economic Barometer

The impact at a glance…

Indicator	Latest Release Date	Latest Value	Previous month value	Source
Jobseekers Allowance and Universal Credit Claimant levels	May 2022	10,175	10,619	ONS, monthly update
% of vacant shops (estimate for YNY)	April 2022	~8.7%	~8.6%	Local Data Company, update unknown
No. of positive covid-19 test results	March 2022	26,585	16,140	Public Health, daily update
No. of start-ups	March 2022	314	280	BankSearch, monthly update
Payrolled employee counts from PAYE	May 2022	362,047	360,323	ONS

Shaded grey = where data is not currently available

*Weekend index looks at people who were in the city centre, in the daytime at weekends, compared to a pre-lockdown baseline of 100.

Key

Positive, significant change

Positive, minor change

No change

Negative, minor change

Negative, significant change

Key challenges

Supply chain challenges, particularly around rising costs
Labour shortages continue - research suggest that the labour market is shrinking as a result of those economically inactive increasing.
Inflation squeezes household budgets and leads to reduced consumer spending. This has been a result of disrupted supply chains and a surge in energy prices.

Forecasts

The revised forecasts from Oxford Economics show a minor dip in employee levels between 2020 and 2021 (-0.2%); previously an increase in employees was expected during this period. The level of recovery has also been updated and pre-pandemic levels are now anticipated to return by 2025. Despite the labour shortages currently in the market, the increases to employees in these forecasts are mostly stagnant, with a very minor increase from 2021 to 2025.

Previous forecasts in October for overall employee levels showed a stronger resilience, with pre-pandemic figures expected to return in 2021. Since October there have been some shifts in the economy which may have impacted this. The recent Omicron variant, which is highlighted above, caused some caution in consumers, particularly in the run-up to Christmas.

According to Oxford Economics, GVA takes a dip of 9.8% in 2020, which aligns with forecasts made in October 2020. However, although GVA began to increase again in 2021, full recovery is now anticipated this year. Like employment, recovery differs across sectors. Accommodation and food services, one of the most vulnerable sectors throughout the pandemic, is anticipated to grow from 2021 continuously to 2030, with pre-pandemic levels returning in 2022. A similar picture is seen in other sectors, such as Administrative and support, Arts, entertainment and recreation and Human Health and Social Care. Comparatively, Agriculture, forestry and fishing is not expected to return to pre-pandemic levels, whilst Mining and Quarrying is experiencing a continuous decline.

The next forecasts will be available at the end of April 2022.

Challenge Highlight - Inflation

One of the biggest challenges right now, for both households and businesses, is the rising cost of living. In January 2022, inflation reached its highest recorded levels since 1992 and some forecasts suggest that it could reach double-digits later in the year if the surge in energy prices continues.

According to the ONS, two thirds (66%) of adults in Britain reported that their cost of living had increased in the past month; with higher gas and electricity bills being the primary cause. Between January and November 2021 domestic gas prices had increased by 28% and domestic electricity prices by 19%. This could continue to worsen in April 2022 after Ofgem, the energy regulator, reviews the price cap again this month.

Alongside inflation, household budgets are likely to be vulnerable due to changes to income tax and National Insurance contributions; higher interest rates; changes to Universal Credit; and stagnant wages (this combined with inflations means that real wage levels are actually falling).

The dramatic increase to energy prices has happened both in the UK and globally, primarily due to supply chain issues and strong global demand. Nationally, this has been strained further by “low levels of wind, outages at nuclear plants, and a fire that has shut down a key electricity interconnector”; which has led to a greater use of gas power stations. Most heating in the UK is supplied by gas, which has led to domestic energy bills going up. York and North Yorkshire reflect the national picture with a similar reliance on gas for domestic heating.

On top of the humanitarian issues, the war between Ukraine and Russia could also have a detrimental impact on the UK’s economy. Trade is less of an issue, as neither country is a major UK trading partner; with Russia being the 12th largest importer for the UK and Ukraine much lower. However, the conflict may exacerbate energy prices and lead to higher commodity costs. Already wheat prices have almost doubled as a result. This could dampen economic growth, as both customers and businesses face increased prices. Currently, not all businesses are passing on their costs to customers, but this could pick-up later in the year.

The Institute for Employment Studies has also said the demand for workers is holding back growth and may also push up inflation.

Those most at risk from the impact of inflation and rising costs are low-income households, those in homes with poor fuel efficiency and older households.

Although all households are exposed to the rising costs, low-income households will be hit the hardest, as they spend a larger amount of their wages on utilities and food. During the pandemic, the level of savings within banks did increase, but this was more common among high-income households, who will be less vulnerable to the economic uncertainty. For those at the opposite end of the scale, there will be little reserves in their budget to handle this increase.

Within York and North Yorkshire, there are already some challenges around fuel poverty – with the worst levels within Scarborough, Richmondshire and Ryedale. Almost all of the districts within York and North Yorkshire perform worse than England’s proportion, other than Selby and Harrogate. The current crisis could see this levels further increase.

A study by the Resolution Foundation has found that the number of households suffering from “fuel stress” – those spending at least 10% of their family budgets on energy bills – is set to treble to 6.3m overnight when the new energy price cap comes in on 1 April.

Much of York and North Yorkshire’s housing stock is rated worse than an EPC rating of C (which also has implications for decarbonisation ambitions).

Businesses will also feel the strain of inflation as their utility and materials costs start to spike. This comes at a time when many have accrued debt throughout the pandemic and have little reserves to counteract this increase. It is also likely that there will be a decreased demand for products and services from customers; especially as a typical household’s income may fall by £1,000 this year once the effect of inflation is accounted for.