Good Growth for Cities

London performs well on new businesses per head, income and skills, but faces challenges on transport, house price to earnings and owner occupation.

London ranks 14th out of 42 cities across the UK in the Good Growth for Cities Index.

London scores particularly well in three key areas:

• New businesses per head, where London achieves a score of 5.6, compared to the national average of 1.0.
• Income, where London achieves a score of 4.9 on our index, considerably above the next highest scorer, Oxford, which scores 3.4 on our index.
• Skills, where it scores considerably above average for both 16-24s and those aged over 25.

However, it is clear from the rest of its scores that London pays a ‘price’ for this success with particularly low scores for:

• House price to earnings, where it scores considerably below the UK average.
• Owner occupation, which is strongly correlated to the house price to earnings,
• Transport, where London achieves a score of -3.6 for the Travel to Work Area and -3.9 for the borough specifically.

Assessing the potential economic impact of COVID-19

• The average annual economic growth rate for London is -11.4% in 2020, lower than the UK average of -11.0% in 2020.
• Looking ahead London is estimated to grow by 4.5%, slightly lower than the estimated average annual economic growth rate of 4.8% for UK cities.
• As of 31 October 2020, London has 9.7% of its workers placed on the UK furlough scheme, higher than the UK average rate of 8.1%.

Three out of eight cities in the Midlands achieve scores above the UK average, with two cities – Milton Keynes and Leicester – in the top ten of the Good Growth for Cities Index.

As a whole, cities in the Midlands perform well on the following criteria:

• Environment, where six cities score above average and all cities at or below average achieve higher scores than last year.
• Owner occupation, where seven out of eight cities score above the national average.
• Income distribution, where six cities score at or above the index average.

However, this positive performance is also coupled with lower scores in skills, with five cities scoring at or below the national average.

Assessing the potential economic impact of COVID-19

• The average annual economic growth rate for cities in the Midlands region is -11.4% in 2020. This is below the UK average rate of -11.0% in 2020.
• Leicester is expected to suffer more economically in comparison to other cities in the Midlands, with a growth rate of -12.2% in 2020 compared with other cities such as Birmingham at -11.7%.
• Milton Keynes is estimated to have the third lowest annual GVA growth rate in 2021 out of all cities in the index, growing at 4.0%. Coventry also has a relatively low annual GVA growth rate of 4.3% in 2021.

As of 31 October 2020, local authorities surrounding the city of Birmingham have some of the highest rates of workers on the UK furlough scheme. 8.9% or more of the workforce in Birmingham, Solihull and Stratford-upon-Avon are on the scheme.

• Belfast is the 34th ranked city in this year’s Index overall and fifth out of the six cities in the devolved nations that we cover in the main Index.
• Belfast performs above average for jobs, work-life balance, house price to earnings, owner occupation, transport and income distribution.
• In contrast, Belfast performs below the average for health, skills and environment.
• The variable with the biggest improvement in Belfast relative to last year’s index was new businesses, which improved by 1.35 over the period.
• On the other hand, work-life balance saw the biggest decline in Belfast since last year’s report, falling by 0.14 relative to the 2019 index.

Assessing the potential economic impact of COVID-19

• The average annual economic growth rate for Belfast is -11.4% in 2020. This is below the UK average growth rate of -11.0% in 2020.
• However, the region’s economy is set to recover better than the UK average rate of recovery in 2021, with Belfast’s economy growing by 4.9% in 2021.
• Belfast has a particularly higher than average proportion of its economy in the Wholesale & Retail trade sector, which is a sector that we expect to be able to manage the impacts of pandemic in line with the UK average impact for all sectors.
• As of 31 October 2020, 8.8% of workers were on the furlough scheme in Belfast, above the average UK rate of 8.1%.

The highest performing city in the North West is Preston, which comes 16th in our index. The lowest performing city is Liverpool, ranking 25th out of 42 cities.

As a whole, cities in the North West perform well on the following criteria:

• Work-life balance, where all cities in the region perform above the national average.
• House price to earnings, where all cities score above the UK average.
• Jobs, where all cities in the North West score above or around the UK average.
  However, the North West performs less well on skills and environment.

Cities across the North West perform very differently across the index, reflecting the individual challenges that each city faces.

Assessing the potential economic impact of COVID-19

• The average annual economic impact on cities in the North West region is -11.9% in 2020, the lowest rate out of all regions and lower than the UK average rate of -11.0% in 2020.
• Liverpool and Manchester in particular are badly affected, with Liverpool being the worst hit of all cities in the index with a GVA growth rate of -13.3% in 2020.
• Economic recoveries in 2021 are expected to range between 4.8% and 5.4% for all cities in the North West region excluding Birkenhead.
• The highest take-up rate of the furlough scheme in this region is found in Salford and Manchester authorities, which had 9.0% and 9.5% of its workers respectively on the scheme on 31 October 2020.

Seven out of nine cities in the South East score above the UK average, with Oxford, Reading and Southampton ranking first, second and third respectively in our national index. Southend is the lowest performing city in the region, ranking 36th out of 42 cities across the UK.

As a whole, the South East performs particularly strongly in four key variables:

• Income, where all cities in the region, bar Norwich. score above average.
• Health, where all cities perform above average,.
• Environment, where all cities in the South East score above the UK average.

There is, however, a price for this success, with all cities in the region scoring below average in housing price to earnings and at or below average for work-life balance (with the exception of Brighton).

Assessing the potential economic impact of COVID-19

• The average annual economic impact on cities in the South East is -10.5% in 2020, above the UK average of -11.0% in 2020.
• Looking ahead, the average growth rate for cities in the South East is estimated to be 4.5%, slightly lower than the estimated average annual economic growth rate of 4.8% for UK cities
• While Oxford ranks first in the Good Growth index, the economic impact of the pandemic in 2020 is worse than some others in the region, at -9.9%. Southampton, Norwich and Portsmouth are all impacted less in 2020 in GVA growth terms.
• However, there are also cities in this region that are some of the worst hit - Medway and Southend are predicted to have growth rates of -12.7% and below in 2020.
• The South East has a lower than average take-up rate of the UK furlough scheme. ~217,000 workers were on the furlough scheme as of 31 October 2020, equivalent to 6.7% of all workers. The UK average take-up rate of the furlough scheme is 8.1%.
• The local authority of Crawley, home to Gatwick Airport, has the highest take-up rate of the UK furlough scheme in the region. 13.2% of Crawley’s workers were on the scheme as of 31 October 2020.

Good Growth for Cities - South East

Two cities in the South West - Bristol and Swindon - are in the top fifteen of this year’s Good Growth for Cities index. Bristol ranks sixth out of 42, Swindon 11th, while Plymouth comes in at 19th.

• The three cities in the South West perform above average in jobs, owner occupation and the environment.
• Bristol performs above or around average for all variables except transport and house price to earnings.
• Plymouth performs below average.on health and new businesses
• Swindon performs below average.on work-life balance, house price to earnings, skills and income distribution.

Assessing the potential impact of COVID-19

• Bristol’s GVA growth is projected at -10.4% in 2020 and 4.3% in 2021. Swindon’s GVA growth is projected at -9.6% in 2020 and 4.0% in 2021. Both cities therefore have been less impacted by the pandemic in 2020 than average (-11.0%), but also have slower recovery rates in 2021 (the average is 4.8%).
• Plymouth is not included in the GVA analysis due to data limitations.

Cardiff ranks 27th out of 42 in this year’s Good Growth Index, with Swansea coming in at 38th.

As a whole, cities in Wales perform well on the following criteria:

• Transport, where both cities score above the national average.
• Owner occupation, where both cities score above the national average, despite absolute decreases in index scores.
• Income distribution, where both cities score above the national average.

However, both cities perform below average on health and income, and at or below average on jobs.

Assessing the potential impact of COVID-19

• Cardiff’s GVA growth is projected at -11.5% in 2020 (below the UK city average of 11.0%) and 4.9% in 2021 (above the UK city average of 4.8%). Swansea’s GVA growth is projected at -10.7% in 2020 and 4.8% in 2021.
• Cardiff and Swansea’s furlough rates are some of the highest in the UK, with furlough rates of 9.3% and 8.8% respectively which is above the UK average rate of 8.1%.

Only one out of nine cities in Yorkshire and the North East achieves a score above the UK average in the Good Growth Index. Leeds ranks 12th out of 42 cities, whilst the other cities in the region rank from 26th to 42nd. The region also has the lowest performing city in this year’s index: Doncaster.

As a whole, cities in Yorkshire and the North East perform well on the following criteria:

• House price to earnings, where all nine cities score above the national average.
• Transport, where every city, bar Sheffield, score above the national average
• Income distribution, where eight out of nine cities score at or above average.

However the region performs poorly in several other variables, including: income, jobs, owner occupation and new businesses per head where only one or two cities perform at or above the national average for each variable.

Assessing the potential economic impact of COVID-19

• The average annual economic impact on cities in Yorkshire & the North East is -11.8% in 2020.
• Doncaster and Bradford are expected to be among the worst affected by the pandemic, with estimated growth rates of -12.5% and -12.6% in 2020 respectively. However, both cities are expected to see stronger than average recoveries in 2021, with 5.6% GVA growth projected for Doncaster in 2021 and 5.3% for Bradford.

Hull is the least impacted city in this region (-10.4% in 2020), but faces a slower economic recovery than other cities in this region (4.5%).