Nearly all UK cities lagging behind European average for productivity

victoria_square_birmingham_at_duskThe UK’s major cities are lagging behind their European competitors in terms of skills, innovation and productivity, claims a new report from the Centre for Cities think tank. In Competing with the Continent, the authors argue that the onus is on the UK to come up to speed with the 330 cities covered in the report, especially if they want to compete in the new post Brexit European landscape. However, the report notes that the UK has a number of existing, structural advantages over other countries. UK cities generate around a fifth of Europe’s total economic output and contribute more to the national economy than cities in other countries. Major British cities contribute 60 percent of national GDP, compared to just 36 percent in Germany and 32 percent in Italy. The report shows that UK cities lag behind on a range of indicators including 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.

The report’s key finding is that the vast majority (90 percent) of UK cities – 57 out of 63 examined – perform below the European average in terms of productivity and over half (39) are among the 25 percent least productive cities on the continent.  Also, more than three-quarters of UK cities have a lower proportion of high-skilled workers than the European average and the UK is home to the third-highest concentration of low-skilled residents in Europe, behind only Spain and Poland. Cambridge and Oxford are the only UK cities in the European top 20 for innovation, and around four out of five cities in Britain fall below the continental average.

The UK economy relies on a handful of high-performing cities for growth, according to the study. London is the largest city economy in Europe, and accounts for around one quarter of the UK’s economic output. This is greater than Paris’ contribution to the French economy (22 percent) and much more than Berlin (4 percent).

The report sets out a number of key policy recommendations to address the issues it raises, including:

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.

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.

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.

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One British city that has been lauded for its entrepreneurial spirit is Birmingham (pictured). The city has been named “the most enterprising place in Britain” by the Enterprising Britain Awards. The awards are commissioned by the Department for Business, Energy and Industrial Strategy (BEIS) and aim to recognise the regional initiatives that boost economic growth and enterprise in local communities. The city was named was the UK’s most entrepreneurial after creating or safeguarding 4,300 jobs and generating £87m in private sector investment. A total of 1,000 business were supported in some way by the council and its Local Enterprise Partnership.

In a statement, Birmingham City Council leader John Clancey championed the role of the council in working alongside the LEP to create a strong entrepreneurial environment in the city.“Birmingham is fantastic place to do business and this award shows that when we work together and invest in people, the city really can thrive. We’re supporting Birmingham’s natural creativity and entrepreneurial drive to create jobs, improve skills and give people across the city the opportunities they need and deserve.”

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