The UK economy is clustered in its 63 largest cities and towns. There is a great deal of variation between these places in terms of the types of economic activity that concentrate within them, and the opportunities they create for people who live in and around them.

This briefing pulls an array of indicators into two indexes to summarise and compare the performance of different places on two key issues — their ability to attract businesses and to provide employment opportunities to individuals — and what this means for policy, particularly ‘levelling up’.

Findings

• There is a North/South divide on both indexes. Cities and large towns in the Greater South East perform strongly across the basket of business indicators, and they offer a greater number of employment opportunities.
• There is a great deal of variation between the largest cities and towns in the North and Midlands. Some, like Manchester, Coventry, and Leeds for example, perform in line or even better than the urban average, suggesting that, with the right support, they could more easily catch up with the economic growth of their more successful southern counterparts.

What does this mean for policy and the Government’s ‘levelling up’ agenda?

1. An important part of improving the daily lives of people will be to end local government austerity in this year’s Spending Review and increase spending on everyday services such as education and policing.
2. Government investment to improve the economy outside the Greater South East of England will need to be more selective. Economic realities mean that the Government must be careful what it promises so as not to create a noose for its own neck.
3. Many cities and large towns are not offering the benefits required for business as the national economy becomes ever more knowledge-based. The economic strand of ‘levelling up’ needs to focus on addressing the reasons why there are too few higher-skilled, better-paid job opportunities located in urban areas outside the Greater South East. A key part of this approach needs to address the underperformance of the North and Midland’s biggest cities such as Birmingham, Manchester and Liverpool if it is to bring greater prosperity to many millions of people.
4. Policy should not ignore cities and large towns in the South. The continued success of cities like Brighton and Milton Keynes are important for regional prosperity and support will be required to help these places deal with the costs of growth. Crucially though, the policy interventions in these places will look very different to those further north.

Business environment index

Employment opportunities index