Economy Watch - ‘We are facing a potential £8 billion hit to our economy’
Coast to Capital Cheif Executive, Jonathan Sharrock has written a blog which will focus on the huge impact which COVID-19 is having on businesses centered around Gatwick Airport and the aviation based economy which is just one aspect to our complex and diverse economy.
Following the news that Gatwick Airport has consolidated its operations and limited runway opening hours, airport handlers have warned that they are close to collapse putting 25,000 jobs across the country at risk. Many of these will be based around Gatwick. We estimate that the aviation sector in our region could face an up to £8 billion hit across the coming year.
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We are hearing that the massive reduction in aviation demand by passengers and subsequent hit to the aviation related economy around Gatwick Airport is now filtering out to the wider economy.
For example, a successful manufacturer of testing equipment, which exports 80% of their goods globally is finding it impossible to send their products over to Asia. Other exporting companies have told us that air freight rates have increased by up to 80%. The situation is clearly having a significant impact on businesses across the region who export goods via piggy backing on to passenger flights.
The impact on Manor Royal Business District
Pre-COVID-19 the Gatwick Diamond, the cluster of towns in East Surrey and West Sussex surrounding Gatwick airport, had a combined economy of £24 billion and 368,000 jobs. It represents a symbiotic economic relationship between the airport and the local area that has grown and developed over 70 years.
Manor Royal Business District, our area’s largest business park and situated very close to Gatwick, is home to more than 500 businesses employing 30,000 people, including blue-chip global brands. Its 240 hectares include headquarters for Virgin Atlantic, CGG, Thales, Varian Medical Systems, Elekta, Vent-Axia, and Doosan Babcock Energy.
Executive Director of the Manor Royal BID reports that that the impact on the park is mixed with some companies very, very busy (e.g. logistics), some ticking along (e.g. med-tech) and others very much struggling and worried about survival for whom the available grants and support either help a bit or not at all. For example companies that depend on gatherings and assembly (e.g. those involved in the events industry) but that are not technically classified as retail, leisure or hospitality. For them no relief from rates and no cashflow.
More to come
We continue to receive data that suggests that our area is amongst the worst hit parts of England for job losses (outside London) and we are assessing the impact of COVID-19 to focus our Local Industrial Strategy on our recovery from the crisis.
For future blogs I will also focus on the economy of Brighton and the South Coast and other key sectors including our agriculture sector and glasshouse economy. Also on the impact on SMEs and how our new Backing Business Grant support is starting to help these businesses.
The team and Board is thinking hard about the following and we will report further when things start to become clearer:
- The potential challenges that will be faced on the return to work. What is the impact of blanket restrictions on working people? What measures do we need to put in place to support a quick return to work in our region?
- The investment and support will be needed to support recovery. Is this infrastructure? Or help for people to retrain? Or sector interventions? How to protect business confidence?