South East ranked second in overall productivity new research shows

The South East has achieved the second-highest level of overall productivity in the UK, coming second only to London, according to new analysis by PwC UK. The research shows that the South East also had the second highest manufacturing productivity of the regions with an output per hour of £45, in comparison to the highest rate in Scotland of £46 per hour. The South East regional growth in output between 2010 and 2019 was at 4.3%.

London remains the UK's most productive region overall, however, excluding the financial services London’s lead over other regions narrows. London was named the most productive region for construction, with a construction output per hour of £39 in 2019. Only two other regions had construction productivity greater than £30 per hour - the East and South East.

According to the report, the region’s standout productivity has been buoyed by its strength in high value areas, such as electronics (13.6% of GVA) and pharmaceuticals (12.1%). With its close proximity to London and a significant concentration of talent and universities, the South East is a preferred location for many technology companies.

The East of England ranked fourth in overall productivity, and third in manufacturing with an output of £44 per hour. However, the manufacturing productivity in the region saw slight growth of just 1.6% between 2010 and 2019. The region’s largest manufacturing sub sector in terms of GVA is food & drink (13.4%), followed by machinery equipment (11.8%) and pharmaceuticals (10.8%). It also boasts Cambridge, one of the world’s most successful life sciences and technology clusters. 

In the absence of a national industrial strategy, local governments and regional mayors are working with communities, businesses and educators to develop place-based strategic plans and initiatives.The Cambridge Cluster, was one of the examples that has built-up around the university and its world class expertise and research in areas such as artificial intelligence (AI) and life sciences. The Cluster’s knowledge-intensive businesses employ more than 70,000 people and generate £21 billion in annual turnover. This benefits the wider East of England region, PwC Tracker shows, which has the highest level of investment in professional, scientific and technical activities in the country.

The Tracker demonstrated that the regions with some of the highest productivity growth rates between 2011 and 2021 have benefited from some of the largest amounts of investment (measured by Gross Fixed Capital Formation as a share of GVA in 2020). If such regions continue prioritising investment and are successful in translating this funding into improved efficiency, they are likely to see significant boosts to their long-term productivity rates.

Julian Gray, PwC’s South East Regional Market Leader says:

“I am very pleased to see the South East ranked second in overall productivity among all regions. The South East's outstanding performance as the second most productive region underscores our commitment to driving economic growth and attracting investment. Our tracker shows that the driving force behind this success has been strong collaboration between businesses, technology providers and higher education institutions. Together, we are bridging regional divides and  advancing our prospects for a brighter future."

"One of the keys to future productivity in the South East is to focus on the skills of the future. It's a significant achievement that the South East Region has secured the top spot in the Golden Age Index this year. Given the evolving needs in IM&S sectors and the dynamic technological landscape, we recognize the importance of nurturing talent among both experienced professionals and young individuals. PwC is fully committed to this cause and will continue to play an even greater role in shaping the future of our workforce.”

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