Summary

Cities have always competed for investment, trade and talent. In recent decades, increasing globalisation and technological development has made this competition ever greater. So in order to continue to create jobs and wages for people living in and around them, cities need to be attractive beyond national borders.

For the UK, the ability of its cities to attract investment will determine the success of the national economy as a whole. But little is understood about how UK cities measure up to their continental counterparts.

This report seeks to address this by comparing the UK’s 62 cities with 268 cities across 16 European countries, looking at a range of economic indicators to see how well they are competing with the continent.

The report shows that UK cities lag behind their continental competitors on a range of indicators – the majority trail on skills, innovation and productivity, and a number have an industrial mix that has more in common with cities in Eastern Europe than those in the West.

This matters because it affects the ability of UK cities to attract business investment, create jobs and grow both their own economies and the UK economy as a whole.

Policy recommendations

1. UK cities need to compete in the knowledge economy if they are to be successful

This report shows that many cities, particularly in the North of England, are struggling to compete when it comes to the knowledge economy. They have small shares of businesses services jobs in their cities, low levels of patent activity and large numbers of residents with few or no formal qualifications.

This must change if cities are to successfully compete for international investment. Policy should focus on making the UK’s cities more attractive to investment from businesses in higher-skilled, better-paid activities.

2. Low skills is a stand out problem

A major factor in a business deciding where to invest or where to expand is whether it can recruit the workers that it needs. This report shows that UK cities are at a disadvantage when competing against many other European cities on the avaliability of skilled labour. Policy must therefore address the skills challenges faced in many UK cities if it is to make them more competitive.

3. Making the most of big cities

The UK’s biggest cities are currently punching well below their weight. To change this policy needs to improve their two key advantages – their ability to create new ideas and spread information, and the access they give businesses to many highly-skilled workers. This requires planning policies that take account of the roles of different parts of cities, for example encouraging the creation of commercial space in dense city centres. It also requires investment in transport within cities and their wider areas to better link jobs in city centres in particular to residential areas in suburbs and hinterlands. This should be coupled with steps to improve the skills of residents.