UK’s fastest growth linked to boosting exports to South East, data shows

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Labor will have to focus more on developing services exports to deliver faster economic growth, according to a review which warns that the UK’s Northern regions are continuing to lag far behind the South East is more prosperous.

The potential to increase productivity and incomes has shifted significantly to the South East, driven by the export of high-value services, such as IT and finance, the Center for Urban Thought said on Monday .

“If we build more in London and the Middle East we know there will be a positive growth effect, although politics make it difficult,” said Andrew Carter, chief executive. of the Center for Cities.

He added that making it easy to build in existing rich areas is one of the fastest ways to increase growth.

Employees are committed to investing in everyone places as part of its upcoming industrial policy, as well as plans to expand English devolution and strengthen local mayors.

The government’s industrial policy describes narrowing the gap between the South-East and other regions as “key” to boosting overall growth, with advanced levels. production identified as a target sector.

However, Tony Travers, professor of government at the London School of Economics, said Labor will need to make tough decisions if it wants to deliver a rapid improvement in GDP.

“The government has sold itself on growth to start with, but this review highlights how dependent they are on London and the South East to achieve that goal. The reality is they have to decide to live with it, or try to change and they risk ending up with little growth,” he said.

The report highlighted a persistent north-south economic divide, with eight of the 10 cities with the highest incomes found in the Great South despite successive governments’ pledges to reduce unemployment. enough.

Since 1997, despite measures to reduce regional economic disparity in the UK such as the Northern Powerhouse and Leveling Up, “there has been no change based on earnings”, the report said.

The average worker in London now earns £20,000 a year more than their counterpart in Burnley, the lowest-paid town.

Cities needed to create the conditions to “attract advanced companies if they want to be more successful”, regardless of the sectors the companies operate in, the report concluded.

Carter said the findings highlight the need to strengthen planning reforms and focus industrial policy on economic areas with the highest potential for growth.

The ranking of cities in terms of the number of “new economy” businesses per capita of the population, operating in areas such as AI, advanced materials, fintech or life sciences, deviates significantly from London and the South East.

Seven of the top places were in the South East, while seven of the bottom 10 were in the north of England.

The think tank also said that the manufacturing sector should not be “overemphasized” in any plan to raise wages outside the South East, adding that the sector is set to play a “very small” role. in the economy as a whole.

“It is unlikely that the region will see a sustained improvement in the performance of its export base that is not led by high-quality service activities,” it added.

The report also warns against over-reliance on one sector, lest it decline, pointing to Aberdeen’s reliance on oil and gas exports, saying that areas with strong industries they should seek to diversify their economy.

The Department of Finance said that it is still committed to the growth of the region, depending on government allocation, investment and regulatory reform.

“Growth is the first mission of this government’s ‘plan for change’ and ensuring that growth is felt across the UK is a key part of that,” the spokesman added.