As is now well established, the UK’s urban areas play a critical role in the UK economy. But until now, little has been known about how the UK compares to other countries in this respect, and how individual UK cities compete against European counterparts.
Our new report Competing with the Continent presents an in-depth picture of how UK city economies compare to 330 European cities from across 17 countries. It reveals a number of important findings which should be a key consideration for the Government as it seeks to create an economy that works for all, at a time when the UK is set to leave the EU. Here’s four key takeaways:
1. UK cities play a bigger role in the national economy than in other countries
The UK is the most urbanised economy in Europe – its cities making up 60 per cent of the country’s GVA (gross valued added). In comparison Spanish cities make up just 45 per cent of their national GVA, German cities 36 per cent, and Italian cities just 32 per cent. (See the full breakdown here).
2. UK cities also make the biggest contribution to the European economy
In total, UK cities represent 21 per cent of Europe’s urban economic output, the largest share of any nation. As a comparison, German cities represent 19 per cent of urban Europe GVA and French cities 18 per cent (the full breakdown is here). In addition, London is the largest economy in Europe, with a GVA of £340 billion. The chart below gives a list of all the cities in the report by GVA – London, Manchester and Birmingham all make the top 20:
3. Yet UK cities are lagging behind in terms of productivity
Despite the UK economy being very dependent on its cities, too many of them fall behind their continental competitors on productivity. Nine out of 10 UK cities (57 out of 63) perform below the European city average, and more than half are among the 25 per cent least productive cities in the continent. The map below gives a quick breakdown of the UK’s productivity problem – a couple of cities in the South East do very well, but many others are lagging behind (more detail on this here).
4. Poor skills levels are likely to be the biggest cause of low productivity.
UK cities are home to the third largest concentration of low-skilled residents in the continent, behind only Spanish and Polish cities. Only six cities had a lower proportion of low-skilled residents than the European average. Three out of four UK cities also have a lower proportion of high-skilled residents than the European average, although nationally the proportion of high-skilled is high.
So what do we do?
These findings raise serious questions about how Theresa May can go about achieving her ambition of spreading prosperity to all parts of the country, raising wages for residents of all cities, and ensuring UK cities are able to attract investment and trade on the international scene.
Given the country’s economic structure and the growing strength of its services sector, it is clear that cities must attract more knowledge-intensive firms and jobs in order to compete in the years to come. To do so, cities must also provide the highly-qualified workforce which these types of firms require – and that will require a long term commitment to improve educational attainment and skills levels across the country. Finally, policymakers should focus on making the most of big cities, which largely lag behind compared to their counterparts. If these cities are firing on all cylinders, they could provide opportunities for individuals living far beyond their administrative boundaries.
You can read about these findings in more detail here. Or you can head to our European Cities Data Tool to explore all our data on the 330 cities covered in the report.