Britain’s secondary cities are underperforming their European peers

Glasgow. 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. 

The reasons why a slim majority of the British people voted for Brexit back in June 2016 are many and varied. But one of them, I think, was a vague sense that the British economy was somehow being held back through its links to Europe – that we were, in the charmingly offensive phrase of Daniel Hannan MEP, “shacked to a corpse”.

This argument was nonsense on several levels: the Eurozone economy is now outperforming the British one; severing links with our largest trading partners is highly unlikely to put rocket boosters under the national economy. But there’s a bigger, more fundamental reason I’m not buying it: compared to those of most European countries, the British economy really isn’t that great.

To demonstrate this, we have to look beyond national averages, and drill down into the performance of individual cities. Below is a chart showing productivity rates in the capitals of the five largest western European countries: basically, how much wealth the average worker generates in a year.

(Some technical stuff, for those who wish to know. The data comes from the Centre for Cities’ Competing With the Continent database, which collated it from a variety of sources. The measure used is Gross Value Add (GVA) per worker, adjusted for purchasing power parities and expressed in pound sterling. The data is from 2011. More on methodology here if you need it.)

Anyway, here’s the chart:

There are no huge surprises here, I’d guess. Parisians are a fair bit more productive than Londoners, Romans a little less, Madrileños a chunk less than that. Germany may be the biggest economy in the EU, but its capital – surrounded as it is by what was East Germany – still cheerfully describes itself as, “Poor but sexy”.

Here’s the thing, though: capitals are not always representative of the countries they sit in. And London is by far the richest major British city. So what happens if we compare these five countries’ secondary cities?

First, we need to define our cities. For the purposes of keeping the data manageable here, I’m restricting myself to the five biggest European countries (Britain, France, Germany, Italy, Spain). I’m also only looking at urban areas whose populations Demographia puts at higher than 1m.

This presents us with a very slight problem: Demographia and the Centre for Cities define cities differently, and some of the “urban areas” listed by the former are counted as two or more different cities by the latter. Where that’s happened, in the name of simplicity, I’ve replaced the urban area with its dominant part: so Leeds instead of West Yorkshire, Birmingham instead of the West Midlands, Dortmund instead of the Ruhr.

That gives us a list of 19 cities to play with. Here they are with the population of their urban areas:

  • Dortmund (Ruhr), Germany – 6,670,000
  • Milan, Italy – 5,280,000
  • Barcelona, Spain – 4,790,000
  • Naples, Italy – 3,700,000
  • Manchester, UK – 2,685,000
  • Birmingham (West Midlands), UK – 2,550,000
  • Cologne (inc. Bonn etc.), Germany – 2,165,000
  • Hamburg, Germany – 2,105,000
  • Munich, Germany – 2,025,000
  • Leeds (West Yorkshire), UK – 1,955,000
  • Frankfurt, Germany – 1,950,000
  • Lyon, France – 1,650,000
  • Marseille, France – 1,620,000
  • Valencia, Spain – 1,585,000
  • Turin, Italy – 1,530,000
  • Stuttgart, Germany – 1,395,000
  • Glasgow, UK – 1,235,000
  • Sevilla, Spain – 1,110,000
  • Lille, France – 1,065,000

Here’s the same data as used in the chart above – GVA per worker, and so forth – for these 19 secondary cities. Once again, I’ve sorted them by size, and coloured the bars by country. See if you can spot any patterns.

You see the problem? The secondary British cities are much less productive than their continental peers, ranking lower than every other city in the chart except Naples. For all the talk of lazy southern Europeans that accompanied the Eurozone crisis, the cities of Mediterranean Europe are performing significantly better than those of northern England or western Scotland.

And the four British conurbations listed here contain just over 8m people between them, not many fewer than London. But where the capital is holding its own compared to its peers, the other big British cities are falling way, way behind. Even if London’s economy gives Britain an advantage, which is by no means certain, than it’s erased by the weak performance elsewhere.


Why this might be happening is an interesting and complex question, and in days to come I’m going to be trawling the data to find out. What is already clear, though, is that the gap on show here must shoulder a hefty blame for the state of the British economy. The problem is not that Manchester, Birmingham or Glasgow are not as productive as London: it’s that they’re not as productive as Marseille, Barcelona or Cologne.

I’ll be coming back to this topic shortly. But in the mean time, why not have a play with the Centre for Cities “Competing with the Continent” database?

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason. 

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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