A key challenge currently facing UK policy-makers is to understand how the Covid-19 pandemic has affected local areas. There is widespread concern that the pandemic may have exacerbated existing inequalities across localities \u2013 a core problem in the UK that policies such as the \u00a34.8 billion levelling up fund seek to address.\u00a0<\/p>\n\n\n\n
Yet there is a lack of direct evidence on the inequality effects of the pandemic at the local level. We have constructed a new Index of Covid-19 Economic Impact to address this data gap. Our index reveals that areas of ethnically diverse metropolitan living have been particularly hard hit by both high levels of existing deprivation and negative effects of the pandemic.<\/p>\n\n\n\n
Addressing persistent uneven regional economic growth has been identified as one of the UK government\u2019s central policy objectives. By extension, a range of policy interventions have been developed including the \u00a34.8 billion levelling up fund<\/a>, whereby local authorities submit bids for investment in town centre and high street regeneration projects, transport improvements and local cultural industries.\u00a0<\/p>\n\n\n\n Critical to the success of these policy interventions will be the extent to which they target the places that most need support to stimulate economic growth and reduce deprivation. This is not an easy task, as the UK lacks sufficiently granular, official real-time (or near-real-time) data on local economic activity.<\/p>\n\n\n\n New research from tracktheconomy.ac.uk<\/a> addresses this issue using real-time, local-level indicators of economic activity sourced from the UK\u2019s leading providers of geo-specific real-time activity data. We partnered with Experian, Fable Data and Huq to source data from consumer and company credit files, transaction-level data on consumer spending and geolocation.<\/p>\n\n\n\n These granular data sources allow us to track, at the local authority level, consumer and firm financial distress, measures of consumer mobility and consumer spending \u2013 which we used in prior research to understand the pandemic by studying local lockdowns<\/a> and regional inequalities<\/a>. We also draw on data from the Decision Maker Panel (derived using employment survey data from the Office for National Statistics, ONS) to measure firms\u2019 expectations for future investment and growth at the local level.<\/p>\n\n\n\n Combining these data sources, we have generated a new Index of Covid-19 Economic Impact, which ranks local authorities by the severity of the economic impacts of Covid-19, as measured using the latest real-time data to the end of June 2021 relative to a pre-pandemic 2020 baseline.\u00a0<\/p>\n\n\n\n For local authorities in England, we then compare this with the underlying economic situation of the local authority pre-pandemic using pre-Covid-19 Indices of Multiple Deprivation (IMD) from the Ministry of Housing, Communities and Local Government.\u00a0<\/p>\n\n\n\n Together, these data sources provide a view of the long-term economic situation of local authorities and their Covid-19 economic experience. (The levelling up fund has partitioned funds for Northern Ireland, Scotland and Wales and in line with this, we conduct separate analysis for these using each country\u2019s own IMD measure \u2013 no UK-wide IMD exists.)<\/p>\n\n\n\n Figure 1 shows the rank position of each local authority in England in the IMD and the Index of Covid-19 Economic Impact. The top-right quadrant shows the most affluent local authorities that have been least affected by Covid-19, which include South Cambridgeshire and Rushcliffe.<\/p>\n\n\n\n <\/p>\n\n\nA new Index of Covid-19 Economic Impact<\/h3>\n\n\n\n
Figure 1: The correlations between 2019 IMD and Real-time Index based on 311 areas in England - by local authority<\/h3>\n\n\n\n