Industrial revolutions

New report looks at the potential of clusters for growth across the country

Report published on 2 July 2014 by Centre for Cities and McKinsey & Company

This major new report supported by the Lord Sainsbury former Minister for Science and Innovation, aims to create a snapshot of the most economically significant clusters in the United Kingdom in 2012. It reviews the barriers to growth that they face, and, most importantly, sets out actions to overcome these barriers. Based on extensive conversations with business leaders across several leading UK clusters, the report warns that if key recommendations around skills, infrastructure and investment in innovation are not acted on, there is risk of an impact on the UK economy and the country’s global competitiveness.

Clusters are just one part of the story of economic growth in the UK. A sustainable recovery will be built on high-performing firms in all sectors across the country, whether these are co-located in a cluster or distributed more diffusely. However, this report focuses in detail on economically significant clusters for three principal reasons:

  1. Clusters are a major contributor to growth. The 31 economically significant clusters identified in this report contain 8% of the UK’s businesses, but generate 20% of UK output (gross value added).
  2. Clusters are important sources of well-paid jobs. The United Kingdom’s top 31 economically significant clusters together employ four million people – one in seven of the working population – and they offer average salaries that are typically higher than those in the surrounding region.
  3. Clusters bring business advantages that cannot easily be replicated. Economically significant clusters are ecosystems buzzing with soft knowledge across a myriad of networks and connections that not only promote a better understanding of what customers want, but also support emerging innovations. As a consequence they attract investment and talent. This virtuous circle is difficult to create by design – accordingly, such clusters can represent a defensible competitive advantage for the UK.