Government’s Brexit economic strategy must prioritise urban areas to boost British trade at home and abroad

Theresa May’s new economic and industrial strategy should prioritise supporting growth in urban areas to help boost the businesses driving British trade, and to achieve her vision of driving economic activity “up and down the country”.

This is according to a new report published today by the think tank Centre for Cities, Trading Places: why firms locate where they do, which offers an in-depth picture of the geographical and industrial make-up of the national economy, and which should be a key consideration for the Government’s recently launched economic and industrial committee.

It shows that the most dynamic sectors of the economy are increasingly clustered in dense, vibrant urban areas – with British cities home to 59% of all jobs, despite making up just 9% of land across the country – underlining the crucial role they play in creating employment opportunities for people living within and beyond their administrative boundaries. In contrast, rural areas account for 53% of land across the country, but just 10% of jobs.

It also reveals that businesses that trade services or goods in Britain or abroad – which account for over 5m jobs nationally – are increasingly choosing to locate in city centres, attracted by the infrastructure, labour market and proximity to other firms which urban areas offer. Employment in these firms has risen by 13% in city centres since 1998, an increase of 76,000 new jobs, but has fallen by 15% in rural areas in the same period, resulting in the loss of more than 109,000 jobs.

The report shows that the increase in city centre jobs has been primarily driven by Britain’s growing services sector, with the number of firms exporting services having grown by 66,000 across the country since 1998. In contrast, the number of businesses in manufacturing and agriculture – which are predominantly based in rural areas – has fallen by the same amount in this period.

Given these findings, the report argues that for the Government’s new industrial strategy to be successful, it needs to recognise and build upon the existing strengths of the national economy, making the following recommendations:

• Support the continuing growth in cities and in the services sector – Investing in improving skills and transport links, and tailoring planning policy to prioritise growth in city centres, would help cities attract and generate more businesses and jobs, particularly high-skilled services firms. Committing to implementing the devolution deals in place for major city-regions would also help those places drive growth in their local economies.

• Adopt a mixed strategy to make the most of rural areas, combining improved transport links to cities with playing to rural sector strengths. Many rural areas rely on cities for jobs, and expanding cities depend on surrounding areas for workers, so better transport links will help boost growth and opportunity across urban and rural places. Support for sectors that prefer to locate in rural areas, such as tourism, may also help offset the reduction in manufacturing jobs caused by globalisation, technological advances and the increased efficiency of that sector.

Commenting on the findings of the report, Alexandra Jones, Chief Executive of Centre for Cities, said:

“National leaders have come a long way in the past six years in recognising the diverse roles that different places, and cities in particular, can play in generating growth and contributing to the national economy. It’s crucial that the new Government continues to build on this progress, if it is to achieve its vision of raising prosperity for people across the country.

“A strategy to extend economic opportunity and prosperity will need policies that work with the grain of the national economy and exploit its strengths. That means taking advantage of the increasingly important role that cities play in generating jobs and growth, and the opportunities this creates for people living in surrounding areas, as well as supporting the long-term shift towards knowledge-based services in Britain and other developed economies.

ENDS

For more information, or to arrange an interview with Alexandra Jones, please contact please contact Brian Semple, Press Manager for the Centre for Cities, on 0207 803 4316 / 07595 439 638 or b.semple@centreforcities.org

NOTES TO EDITORS

The report ‘Trading Places: why firms locate where they do’ will be available to download at centreforcities.org/trading-places from 00:01 on 25 August 2016.

Data contained in the report is based on analysis of the Business Structure Database, Office for National Statistics, 1998-2015.

About Centre for Cities:

Centre for Cities is a research and policy institute, dedicated to improving the economic success of UK cities. We are a charity that works with cities, business and Whitehall to develop and implement policy that supports the performance of urban economies. We do this through impartial research and knowledge exchange. For more information, please visit centreforcities.org