London (Parliament News) – A report preceding the G7 summit indicates UK regional cities lag behind counterparts in the US, France, and Germany due to underinvestment, hindering economic development and productivity growth.
A neglect to invest in the UK’s main regional cities has held back economic development and meant standards of living drag behind the US, France and Germany, according to a report before the 50th G7 summit in southern Italy this week.
What Factors Contribute to UK Regional Cities’ Lagging Productivity?
The Centre for Cities think tank expressed the major difference between the UK and its major rivals was the low level of productivity in municipalities such as Manchester, Birmingham, Glasgow, Sheffield and Nottingham. It expressed that the higher level of productivity – calculated by the output of each worker per hour – could be noticed in cities outside Paris and Berlin of a similar size to their UK counterparts.
How Does UK Investment in Regional Cities Compare Internationally?
The study discovered that investment was also distributed more evenly across a wide range of US cities, which have functioned well after benefiting from local financial sponsorship and, more recently, the Biden government Inflation Reduction Act and Chips Act, which deliver more than £800bn worth of subsidies over 10 years.
Lyon and Frankfurt were rated more highly than Birmingham and Manchester and made the difference between the UK being the top-ranked G7 economy after the US and remaining a middle-ranking country. Canada, Italy and Japan were rated lower than the UK, according to a standard of output per hour.
In a writing titled Climbing the Summit: Big Cities in the UK and G7, the think tank expressed London was flagging as a constant provider of income and assets to the rest of the nation, leaving other cities even more sensitive. It suggested the next government focus on a more comprehensive investment programme to help reduce digital industries in regional cities.
What Measures Are Needed to Boost UK Regional Cities’ Growth?
Andrew Carter, the think tank’s chief executive, stated: “The message for policymakers is to take note of why the US, France and Germany perform so much better than the UK. While not the exclusive reason, a major part of this is the success of their big cities.
“The size of cities like Manchester and Birmingham means they should have an advantage in attracting cutting-edge businesses. This is exactly what cities like Chicago, Munich and Lyon do, offering access to skilled workers, high-quality office space and ‘spillover’ benefits from neighbouring firms.”
Why Do UK Cities Lag Behind in Economic Productivity?
Carter expressed ministers should give municipalities the power to physically expand, letting them build attractive suburbs near public transport connections. These areas could draw businesses, especially companies with high levels of pay that export their services, such as finance, graphic design, commerce, software and publishing. The report stated, “Urban areas where more clustering of knowledge happens tend to be more productive”.
In 2022, a benchmark of G7 productivity as a proportion of annual national revenue ranked the UK as fourth behind the US, Germany and France. UK productivity was almost 16% below the US and Germany.“There are 112 cities in the G7 the size of Nottingham or bigger, but of the bottom twenty for productivity, seven are British. They are in outcome the sick men of the G7, with the recent stuttering of London counting to the UK’s woes,” the report said.