Emerging signs of productivity growth across the North of England

28.06.24

There are signs of a productivity resurgence in pockets of the North of England, according to researchers at the Northern Powerhouse Partnership business-led thinktank.

Both the North East and the North West, along with the South East, have outperformed average productivity growth across England between 2022 and 2004 (when data was first available).

Although London’s productivity growth over this period was the second lowest in England (after the East Midlands), it remains the most productive region in the UK, with productivity around 27% higher than UK average in 2022. It was 33% higher than average in 2004.

The North’s success has been concentrated in a few key areas, with Greater Manchester seeing a 26.4% increase – the largest increase in the country. This has been largely attributed to substantial improvements to transport connectivity across the city region, as well as ambitious and strategic local leadership.

The Humber, the most carbon intensive industrial cluster in the UK, has also seen strong productivity growth over the past two decades. The region has embraced opportunities in the energy transition, attracting international businesses such as Siemens and Phillips 66.

West Yorkshire, Northumberland and Tyne and Wear, as well as the Tees Valley and Durham (14.2%) were the only other Northern subregions to outperform the average productivity growth across England.

The UK’s longstanding productivity problem is well known: our growth is weaker than most of the G7 and this has worsened since the 2008 financial crisis.

This is in large part driven by the underperformance of the regions outside London and the South East, which has contributed to some of the most significant regional divides in the world.

The Northern Powerhouse economic was set up by then Chancellor George Osborne in June 2014 to address this issue, inspired by findings from the Cities Growth Commission led by renowned economist Lord Jim O’Neill.

Boosting productivity would not only boost tax revenue for the Treasury, it would mean higher wages and better living standards for people across the North.

The Northern Powerhouse vision focused on the key drivers of economic growth, including transport, education, skills, innovation, and devolution.

The aim was to create a whole greater than the sum of its parts by linking the great towns and cities of the North into one cohesive economic geography and empowering local leaders to drive long-term economic change.

Lord Jim O’Neill, Chair of the Northern Powerhouse Partnership, said: “While London’s productivity growth has been weak in recent years, particularly since the pandemic, Greater Manchester and the wider North West is continuing to improve – and that has appeared to have accelerated since COVID.

“Since the IRA bombing in 1996, the local leadership in Greater Manchester has been laser-focused in delivering a consistent, ambitious economic vision targeted at inward investment and key productivity drivers such as transport is paying dividends now.

“With the right focus and determination, other city regions – many of which alongside Greater Manchester continue to lag behind – could see the same kind of progress. This would not only be a victory for these local economies themselves and the local workers who will benefit from higher wages, but will deliver a massive boost to the UK economy as a whole.

“It goes without saying that a more stable and committed policy towards England’s regions from the next government, whoever it is, should enable further positive progress.”

Tracy Brabin, Mayor of West Yorkshire said: “The regions outside of London are packed full of potential that has gone untapped for too long.

“Boosting productivity and closing the North and South gap should be a priority for all as it will create more jobs and put more money in people’s pockets.

“Devolution is allowing us to rebalance our economy and deliver the growth our country desperately needs.

“As Mayor I am bringing investment and opportunity to all parts of our region. But with greater devolved powers for the North we can go further and faster, delivering a brighter future for all.”

Read the full report below.