Learning from London

30 Jan 14

London is driving the recovery, but other large UK cities should be contributing much more. They must be given the tools to grow their economies and respond to local circumstances

This week the Centre for Cities launched our latest Cities Outlook report, the annual health check of UK city economies. Brimming with data on how our cities are faring, this year we also took a close look at the economic recovery and, in particular, the links between London and other cities across the UK.

The results of our analysis were striking. They show that London has been the primary driver of the recovery to date, accounting for nearly four-fifths of all net new private sector jobs created between 2010 and 2012. Other cities have performed strongly too: Edinburgh, Birmingham, Manchester and Liverpool all saw significant private sector jobs growth, but others, such as Bradford and Sheffield, have continued to lose jobs, despite the national economic recovery.

This has big implications for the nature of the economic recovery that we are seeing. Just as it was before recession hit in 2008, London is continuing to pull away from the rest of the country. Now home to over 5 million jobs, and capable of attracting huge investment from all over the world, the capital is the UK's greatest urban success story.

Yet London's success is not a sign that we need to think of new ways to hold London back. Rather, it only serves to underline how important it is that we support our other cities, from Cambridge (the most innovative city in the UK) to Derby (with its strengths in manufacturing) or Brighton (in the top three for start-ups) to fulfil their potential and make a bigger contribution to the national economy.

Making the most of large cities is particularly important because of the impact they can have at scale. England's eight largest cities outside London account for over a quarter of the UK’s Gross Value Added, but could contribute much more. Currently only Bristol consistently outperforms the national average on a range of important economic indicators from new business starts to skills levels.

City deals have started to change the balance of power, allowing cities to bend some polities to address their specific challenges but much more needs to be done. We have already seen policy powers handed to Wales, while Scotland is likely to see greater devolution whatever the outcome of this year's independence vote. But despite having economies larger than the entirety of Wales, Greater Manchester and Greater Leeds have comparatively little flexibility to adapt policy to their specific challenges.

There has been much debate since the release of this year's Outlook as to whether the success of London is somehow irresistible, and whether politicians are powerless to stop the gap between the capital and the rest continuing to grow. If we do want our other cities to play a larger role in the national economy, then they have to be given the tools to grow their economies and respond to the distinctive local circumstances that this year’s Outlook so clearly illustrates.

This post first appeared on the Centre for Cities Blog

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