Britain's cities enjoy resurgence in competitiveness, says new report

A resurgence in the competitiveness of Britain's cities is underway according to new evidence.

The UK Competitiveness Index, a measure of the competitiveness of UK regions and locations that has been running since 2000, shows significant improvements in the competitiveness of a number of the UK's cities and urban areas, especially those located in northern regions. The North West of England has seen the biggest improvement in competitiveness since 2006 largely due to the improved performance of Liverpool, Manchester, and Salford.

Liverpool and Salford have both risen 44 places on a competitiveness ranking of 407 locations, with Manchester rising 24 places. Strong gains are also made by York (up 32 places), Darlington (up 73 places), and Durham (up 66 places). Other cities showing marked competitiveness growth are Derby (up 26 places), Leicester (up 54 places), Norwich (up 51 places), Peterborough (41 places), and Plymouth (up 32 places).

Britain’s most competitive city is Guildford, followed by St Albans and Cambridge. The least competitive cities are Hull, Stoke-on-Trent, Sunderland, and Swansea, although with the exception of Swansea all have shown improvement.

London remains the UK’s most competitive region, followed by South East England and the East of England. The least competitive regional economy overall is the North East, followed by Wales, Northern Ireland, and Yorkshire and the Humber. The least competitive local areas are Blaenau Gwent and Merthyr Tydfil in Wales, and Easington in North East England.

The biggest drops in competitiveness occurred within the rural economies of Scotland, South West England, Wales, and the North East of England. Professor Robert Huggins, who devised and compiled the UK Competitiveness Index, said: ‘Our research strongly suggests that urban development in the UK is achieving a significant degree of success. However, this appears to be coming at the expense of many rural areas. While improved urban competitiveness is continuing to play a role in alleviating the North-South Divide in economic fortunes, many local economies in rural areas are suffering from declining competitiveness.

‘Increased efforts are required to explore how the competitiveness of rural economies can be improved in coming years. Recently proposed solutions such as promoting further migration from the north to the south are only likely to accentuate existing problems and cannot be considered a realistic mechanism for achieving economic regeneration and development. A far more realistic option is for government to ensure that the public finance received by regions is based on the needs required to improve their future competitiveness rather than past spending patterns and population levels.’

The UK Competitiveness Index is published by the Centre for International Competitiveness at the University of Wales Institute, Cardiff. It has been tracking data since 1997 and was first produced in 2000. The index is a more sophisticated and subtle instrument for measuring competitiveness than standard measures such as gross domestic product per head. It blends ‘input factors’, such as research and development expenditure, business start-up rates and proportion of working age population with a degree; ‘output factors’, such as exports per head of the population, productivity (output per hour worked), and employment rates; and ‘outcome factors’, such as gross weekly pay*.
Along with the North West of England, strong competitiveness growth has also occurred in the West Midlands, East Midlands, and Northern Ireland. The most competitive local area in Britain continues to be the City of London followed by the London boroughs of the City of Westminster, Camden, Islington, and Hammersmith and Fulham.

In contrast to declines in many rural economies, a number of coastal locations such as Bournemouth (up 46 places), Poole (up 39 places), and Torbay (up 38 places) have improved economically suggesting that regeneration efforts in these seaside towns are stimulating their renewal.

The Regional UK Competitiveness Index uses a composite indicator made up of the following data: Input factors (R&D expenditure, economic activity rates, business start-up rates per 1000 inhabitants, number of businesses per 1000 inhabitants, GCSE results (5 or more grades A to C), proportion of working age population with an NVQ level 4 or higher; Output factors (gross value added per head, exports per head, imports per head, proportion of exporting companies, productivity, employment rates); Outcome factors (gross weekly pay, unemployment rates). The Local UK Competitiveness Index uses a composite indicator based on a similar but narrower range of indicators.