The impact of economic downturn on cities and households: Bristol and Liverpool compared

Dr Patricia Kennett, Reader, School for Policy Studies

Dr Patricia Kennett, Reader, School for Policy Studies

The impact of the economic downturn and subsequent austerity measures on Bristol and Liverpool and the households within those cities has been the focus of a recent research project. Conducted over the past two years, this Economic and Social Research Council (ESRC)-funded project has involved looking at the different ways in which the cities and households have responded to downturn and austerity.

At a recent workshop we presented some of our findings to key stakeholders from local government and the voluntary and community sectors in Bristol and Liverpool, some of whom had participated directly in the research. We demonstrated how the shapes of crisis and austerity in Bristol and Liverpool have been determined by the cities’ respective uneven development trajectories, as well as by their institutional, sectoral and social profiles.

We also sought to show how the transmission of crisis and austerity has evolved, with the 2007 global financial crisis causing loss of employment. This has been felt particularly by middle income males and households without dependents, as well as in the construction and financial sectors. Since 2010 the Comprehensive Spending Review, tax and welfare reform and rising living costs have had a much wider impact, extending to the public sector as well as the voluntary and community sectors with the ‘passporting’ of cuts evident in both cities.

The impact of the crisis and austerity on households has been widespread, with some households across all the ACORN household types used in the study indicating changes in their behaviour and everyday lives. However, it is households which are just “getting by”, or “struggling”, and with dependents, which are being impacted most heavily. For these households, debt accumulation, diminishing savings, and an inability for families to plan for the future have been common experiences as they have struggled to cope with redundancies, pay freezes, lower wages and changing benefits. This is in contrast to the experience of “thriving” households who have felt little impact, have been much more likely to have significant financial resilience and to be established homeowners. The project revealed that for households to be resilient, having resources and assets as well as being part of informal networks, is very important. Increasingly, it is lower-middle and low income households, many of whom have already adopted short-term and high-risk coping strategies, who are facing increasing and long-term economic hardship, and more precarious short-term futures. This is due to a combination of stagnating wages, government cuts to the benefit and tax credit system and increasing living costs in the context of eroded household resources and resilience.

The marked differences in terms of global connectivity, policy histories, socio-economic structures and levels of deprivation between the cities of Bristol and Liverpool are being further exacerbated as austerity measures and welfare reform have begun to have an impact. This pattern is consolidated by increasing deprivation and inequality between neighbourhoods and households within cities, representing a reversal of the gains made in previous decades. The research highlights policy concerns regarding the lack of a coherent national economic development strategy for rebalancing the economy for more sustainable growth. There are also concerns about the fragmented and underfunded new mechanisms for urban governance and economic development activity. Furthermore, given the starkly uneven impacts of the economic downturn, the lack of balance between competitiveness and cohesion in local development activities seems likely to contribute to the further erosion of resources and resilience of particular cities and households.

This post was jointly written by Dr. Patricia Kennett and Dr. Jacqui Croft of the University of Bristol and Professor Richard Meegan and Dr Gerwyn Jones of Liverpool John Moores University.

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