Cardiff remains among fastest-improving cities in the Good Growth Index in the UK

• After being the most improved city in the Demos-PwC Good Growth for Cities Index last year, Cardiff is the fourth highest mover in this year’s index

• Focus on manufacturing and creative industries could be key to future growth

• Along with Swansea, Cardiff scores above the UK average on work-life balance and income distribution

• However, both cities perform below UK average on high streets, health and income measures.

Cardiff has built on last year’s rapid improvement in the Demos-PwC Good Growth for Cities Index, jumping ten places to 20th as a result of its strong performance on indicators, such as work-life balance and income distribution, and skills, especially in younger people. Swansea is in 34th place.

The analysis highlights the role of knowledge-intensive services in Cardiff’s ongoing progress, with around a fifth of the city’s workforce employed in these sectors, and especially the creative community anchored on the BBC’s presence in the city. There is also evidence that Bristol’s strength in the creative sector is spilling over into Cardiff due to its proximity.

Cardiff’s strong manufacturing base, with each worker contributing £91,200 of GVA vs £78,000 for the UK average, provides opportunities for future growth. By targeting growth in manufacturing, local leaders can drive average productivity and capitalise on an existing comparative advantage. 

The Index, now in its 11th year, seeks to show that if growth is essentially about improving the prosperity, opportunities and wellbeing of the general public, the focus must go beyond traditional measures of economic success, such as gross domestic product (GDP) or gross value added (GVA). 

The Index covers a list of broad measures of economic factors the public identifies as most important to their work and finances, and which are therefore essential for judging economic success. It then compares the performance of the largest 50 UK cities, plus the London boroughs as a whole, against those measures. The 12 economic wellbeing factors include jobs, health, income, safety and skills, as well as work-life balance, housing, travel-to-work times, income equality, high street shops, environment and business startups. 

The Index also forecasts future economic (GVA) growth; in both 2023 and 2024, Cardiff and Swansea are expected to grow at above the national average. Against a backdrop of low economic growth, both cities are forecast to grow at 0.1% in 2023 and 0.9% in 2024 - in part due to the sectoral composition of their economies. Both have an above-average level of activity in the health and social work sector, which is expected to be the third-fastest growing industry over the next two years.

John-Paul Barker, PwC’s Market Leader for the West & Wales, said:

“The market conditions are part of the reason we’ve chosen Cardiff as a place to create hundreds of new jobs: access to digital skills, high-growth industries and focused local decision-makers.

“The Index also points towards the areas in which Cardiff and Swansea need to improve; both perform below average on health, our high streets, and income. These are complex issues and won’t be solved by the public sector alone. It’s increasingly clear private businesses have a responsibility to support economic growth in regional cities through social mobility and upskilling initiatives.”

Leader of Cardiff Council, Cllr Huw Thomas said:

“I am delighted that the Demos-PwC Good Growth for Cities Index identifies Cardiff as the fourth fastest-improving city in the UK. Our own monitoring of the performance of the Cardiff economy suggested we were making strong progress against a range of key variables, and this endorsement by Demos-PwC confirms this progress, helping us attract further investment and high quality jobs into Cardiff and our communities. 

“Our focus on key sectors, our investment in transport and digital infrastructure, and the close partnership work between the public and private sectors, have all contributed to Cardiff’s success in the Index. With the continuing growth in investor interest, and their clear commitment to sustainable investment, I anticipate that Cardiff will continue to make its mark in this Index in the future.”

The UK picture

The gap between the highest and lowest ranked UK cities in PwC’s Good Growth for Cities Index is narrowing, as the economic wellbeing of the cities at the bottom of the Index has improved at a faster rate than those at the top.

The Demos-PwC Good Growth for Cities Index ranks 50 of the UK’s largest cities (generally considered those with populations of at least 350,000 people), plus the London boroughs as a whole, based on the public’s assessment of 12 economic wellbeing factors, including jobs, health, income, safety and skills, as well as work-life balance, housing, travel-to-work times, income equality, high street shops, environment and business startups. 

Oxford, Swindon, Exeter, Bristol and Southampton make up the top five cities in the overall Index. Cities in the lower performing end of the Index include London, Bradford, Middlesbrough and Stockton, Birmingham and Manchester. 

Oxford is the top performing city, with a strong performance on economic measures such as income, employment rates and life expectancy helping it to maintain first place. However it is improving at a slower rate than lower performing cities, such as Bradford. While Bradford is at the bottom of the ranking, it is increasing its score more significantly on factors such as skills and income distribution where it performs above the national average. 

PwC’s research shows little evidence of the regional disparity gap narrowing overall and argues that progress in levelling-up the UK is too slow. PwC recommends the need for more radical and ambitious devolution of governance and powers to a regional, local and hyper-local level, including greater fiscal flexibility and innovation to help cities respond to their specific challenges.

Karen Finlayson, regional lead for government and health industries at PwC, says:

“While it is encouraging to see the gap between the highest and lowest ranked UK cities narrowing, progress to level up the UK is too slow. Cities should be places of prosperity and opportunity but unfortunately huge disparity remains across the UK, and we are not seeing enough consistent change. 

“To make the progress needed to drive inclusive growth, a more radical and innovative approach to devolution is critical. This is not simply a shift in powers between central and local government, but instead an effective redistribution of accountabilities to the best-placed decision makers at a regional, local and hyper-local level to deliver the best results for places and people.”

Public priorities turn to cost of living

The Demos-PwC Good Growth for Cities Index measures cities’ performance against a series of 12 variables, each one weighted relative to how important it is considered by the 2,000 people surveyed as part of the study. For the first time the Index provides a regional breakdown of public priorities, underlining what issues are important to people at a local level. The North East places the highest weighting on transport of any of the UK regions, whereas the South East places the environment highest relative to other regions.

As households struggle with the cost of living crisis, they are prioritising financial issues, such as income, jobs and the fair distribution of wealth. However, other public priorities - most likely impacted by cost of living pressures dampening consumer appetite for spending - have fallen, including the strength of the high street and house prices. 

This shift in public priorities has triggered changes to cities’ performances, for example Plymouth takes fifth place this year, rising from 19th last year, performing well on income distribution, work-life balance and commuting times.

Economic outlook for cities

While some cities, such as Oxford, Exeter and Swindon perform well in the index on economic wellbeing factors, they are set to see some of the lowest economic growth across UK cities in 2023. For example, Oxford has an above average share of economic activity within the professional, scientific and technical activities sectors, which are expected to contract during 2023 as financial pressures constrain spending.

In contrast, cities such as London, Liverpool and Belfast are set to break away from the sluggish economic growth expected to be seen in most cities, as they are buoyed by high-growth sectors, such as transportation and storage, and arts and entertainment. 

Read the report in full here: www.pwc.co.uk/goodgrowth