Since 1998, a major northern city has grown almost as fast as London – and it’s not the one you think

Oooh, a clue. Image: Getty.

The latest instalment of our series, in which we use the Centre for Cities’ data tools to crunch some of the numbers on Britain’s cities. 

One of the joys of this column is when I stumble onto something genuinely surprising. I’ve spent so long trying to come up with variations on the phrase “Well I never, it’s the north-south divide again!” that on those rare occasions when I find something weird, I am suffused with a genuine sense of delight.

Anyway, here’s the skinny. This week, I decided to look at how the economies of Britain’s major cities – London, Edinburgh and the 10 Core Cities – have grown over the last couple of decades. The Centre for Cities’ data on Gross Value Add - essentially, how much economic value is being created in each city, in pounds sterling – comes from the Office for National Statistics (ONS), and goes back to 1998.

Direct comparisons between the cities would make trends difficult to spot: the data isn’t per head, so simply by virtue of being so much bigger London would dwarf all the others and render trends impossible to see. To fix that, I’ve expressed the size of each city’s economy as a multiple of its 1998 value: when a city crosses the line labelled “2”, its economy is now double the size it was in 1998.

So, here’s the chart. You may wish to expand it to look at the key.

Click to expand.

The least surprising thing here is that London tops the charts, even on this relative growth measure. Since 1998, the capital has boomed, in terms of both economics and population (the two may be connected). By 2016, its economy was worth more than 2.3 times the amount it was worth just 18 years earlier. That’s equivalent – assuming I haven’t cocked up the maths – to an average annual growth rate of about 4.8 per cent, which is really not to be sniffed at.

The next two on the list probably aren’t that surprising either. Edinburgh is a rich city and a regional financial centre; Cardiff an increasingly important media hub. More importantly, both became government centres in 1999, as the new devolved Scottish and Welsh administrations moved in. Little wonder that this has brought economy benefits. Look at the left hand side of the graph, indeed, and you can see that Cardiff was, for a while, the fastest growing major city in Britain.


Beyond that, though, things start getting counter-intuitive. Because the next fastest growing major city economy in the years since 1998 turns out to be... Liverpool.

This doesn’t really fit the narrative, does it? When we talk about rebalancing England’s economy away from London, it tends to be Manchester that comes to mind – or, at a push, Birmingham. But the latter turns out to have been one of the slowest expanding city economies since 1998, with an average annual growth rate of just 3 per cent (only Nottingham has been slower, and then only slightly). Manchester fares better, but it’s still only mid-table, at 3.7 per cent.

The true Northern Powerhouse since 1998 has been Liverpool. With an average annual growth rate of 4.2 per cent, it’s one of only five of the 12 cities to have doubled the size of its economy since 1998, passing that mark by 2015. Between 1998 and 2009-10, in fact, it was the fastest growing major city in the UK. Then there was the slight matter of the crash and the austerity which followed, but even then it’s bounced back.

This data raises a number of questions to which I simply don’t have the answer. What drove Liverpool’s relatively stellar performance? And why did nobody notice it? By the same token, what went wrong in Birmingham? Have I just mucked up the data? If you have any thoughts, please do let me know.

I’m also aware that these numbers start at a faintly arbitrary point, and that if we started the clock in another year things might look different. So, next time in this slot, I’m going to look at the same data, but this time starting at the crash. Bet you can’t wait.

You can explore the full Centre for Cities dataset here.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites

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“Stop worrying about hairdressers”: The UK government has misdiagnosed its productivity problem

We’re going as fast as we can, here. Image: Getty.

Gonna level with you here, I have mixed feelings about this one. On the one hand, I’m a huge fan of schadenfreude, so learning that it the government has messed up in a previously unsuspected way gives me this sort of warm glow inside. On the other hand, the way it’s been screwing up is probably making the country poorer, and exacerbating the north south divide. So, mixed reviews really.

Here’s the story. This week the Centre for Cities (CfC) published a major report on Britain’s productivity problem. For the last 200 years, ever since the industrial revolution, this country has got steadily richer. Since the financial crash, though, that seems to have stopped.

The standard narrative on this has it that the problem lies in the ‘long tail’ of unproductive businesses – that is, those that produce less value per hour. Get those guys humming, the thinking goes, and the productivity problem is sorted.

But the CfC’s new report says that this is exactly wrong. The wrong tail: Why Britain’s ‘long tail’ is not the cause of its productivity problems (excellent pun, there) delves into the data on productivity in different types of businesses and different cities, to demonstrate two big points.

The first is that the long tail is the wrong place to look for productivity gains. Many low productivity businesses are low productivity for a reason:

The ability of manufacturing to automate certain processes, or the development of ever more sophisticated computer software in information and communications have greatly increased the output that a worker produces in these industries. But while a fitness instructor may use a smartphone today in place of a ghetto blaster in 1990, he or she can still only instruct one class at a time. And a waiter or waitress can only serve so many tables. Of course, improvements such as the introduction of handheld electronic devices allow orders to be sent to the kitchen more efficiently, will bring benefits, but this improvements won’t radically increase the output of the waiter.

I’d add to that: there is only so fast that people want to eat. There’s a physical limit on the number of diners any restaurant can actually feed.

At any rate, the result of this is that it’s stupid to expect local service businesses to make step changes in productivity. If we actually want to improve productivity we should focus on those which are exporting services to a bigger market.  There are fewer of these, but the potential gains are much bigger. Here’s a chart:

The y-axis reflects number of businesses at different productivities, shown on the x-axis. So bigger numbers on the left are bad; bigger numbers on the right are good. 

The question of which exporting businesses are struggling to expand productivity is what leads to the report’s second insight:

Specifically it is the underperformance of exporting businesses in cities outside of the Greater South East that causes not only divergences across the country in wages and standards of living, but also hampers national productivity. These cities in particular should be of greatest concern to policy makers attempting to improve UK productivity overall.

In other words, it turned out, again, to the north-south divide that did it. I’m shocked. Are you shocked? This is my shocked face.

The best way to demonstrate this shocking insight is with some more graphs. This first one shows the distribution of productivity in local services business in four different types of place: cities in the south east (GSE) in light green, cities in the rest of the country (RoGB) in dark green, non-urban areas in the south east in purple, non-urban areas everywhere else in turquoise.

The four lines are fairly consistent. The light green, representing south eastern cities has a lower peak on the left, meaning slightly fewer low productivity businesses, but is slightly higher on the right, meaning slightly more high productivity businesses. In other words, local services businesses in the south eastern cities are more productive than those elsewhere – but the gap is pretty narrow. 

Now check out the same graph for exporting businesses:

The differences are much more pronounced. Areas outside those south eastern cities have many more lower productivity businesses (the peaks on the left) and significantly fewer high productivity ones (the lower numbers on the right).

In fact, outside the south east, cities are actually less productive than non-urban areas. This is really not what you’d expect to see, and no a good sign for the health of the economy:

The report also uses a few specific examples to illustrate this point. Compare Reading, one of Britain’s richest medium sized cities, with Hull, one of its poorest:

Or, looking to bigger cities, here’s Bristol and Sheffield:

In both cases, the poorer northern cities are clearly lacking in high-value exporting businesses. This is a problem because these don’t just provide well-paying jobs now: they’re also the ones that have the potential to make productivity gains that can lead to even better jobs. The report concludes:

This is a major cause for concern for the national economy – the underperformance of these cities goes a long way to explain both why the rest of Britain lags behind the Greater South East and why it performs poorly on a

European level. To illustrate the impact, if all cities were as productive as those in the Greater South East, the British economy would be 15 per cent more productive and £225bn larger. This is equivalent to Britain being home to four extra city economies the size of Birmingham.

In other words, the lesson here is: stop worrying about the productivity of hairdressers. Start worrying about the productivity of Hull.


You can read the Centre for Cities’ full report here.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites

Want more of this stuff? Follow CityMetric on Twitter or Facebook