The economic levelling of the UK economy over the coming years is unlikely and can only be addressed through significant additional investment in the local areas of the UK that ‘have been left behind’.
This is the conclusion of the 2021 edition of the UK Competitiveness Index, which is compiled by researchers at Nottingham Business School, part of Nottingham Trent University, and Cardiff University.
The Index, which has been published since 2000, assesses the competitiveness of local authority areas, Local Enterprise Partnerships, cities and city regions across England, Wales and Scotland, and forecasts have compiled data to predict how they will fare in the years to come.
The most competitive localities are situated in London and the South East, with the City of London remaining the most competitive locality in the UK followed by Westminster and Camden. The least competitive localities are a mix of old industrial towns and more rural areas. The old industrial area of Blaenau Gwent in Wales is the least competitive locality. Redcar and Cleveland in the North East and Mansfield in the East Midlands also display lower levels of competitiveness.
The study finds that Covid-19 restrictions are likely to have impacted on sectors that are dominant in older industrial areas, with Brexit causing problems with access to the cheap labour that agriculture, hospitality and tourism sectors are reliant on in the more rural areas.
The least competitive cities are the old industrial cities of Kingston on Hull, Stoke-on Trent and Sunderland. In contrast, Leicester and Nottingham have seen improvements in their rankings, and a number of city regions that received City Deal funding have seen increases in competitiveness, such as Liverpool City Region, Glasgow and Clyde Valley City Region and Leeds City Region.
However, the findings suggest that these remain exceptions rather than a levelling up, with the likelihood that the competitiveness landscape of the UK will become more uneven, with the least competitive locations forecast to grow at the slowest rates, and negative growth rates predicted for some areas.
In the East Midlands there remain considerable differences in competitiveness between the individual localities. Although the larger cities of Derby, Leicester and Nottingham have not only retained their competitiveness, but improved it in recent years, other more peripheral areas of the East Midlands have seen the opposite occur.
In many cases these areas with industrial heritages, such as North East Derbyshire and Bolsover, or a more rural nature, such as East Lindsey, already had lower levels of competitiveness compared to the larger cities of the East Midlands and those located close by. Further reductions in their UKCI will be likely to increase disparities in the employment and broader life opportunities available when comparing the most and least competitive parts of the region.
One of the report’s authors, Professor Piers Thompson, economist and competitiveness expert at Nottingham Business School, said: “Although the full long-run impacts of the twin shocks of the global Covid-19 pandemic and Brexit will only become apparent in years to come, it is clear that in all regions of the UK there are localities which have been hit harder than others.
“Changes in the way that people consume and work, along with rising costs associated supply chain constraints and access to appropriate staff, mean that the sectors responsible for the competitiveness of some areas is may recover to some degree, but without intervention it is unlikely to return to pre-shock levels.
“While existing policies to support the rejuvenation of a number of cities outside London and the South East appear to be bearing fruit, it is important that ‘levelling up’ is an endeavour that considers all parts of the UK.
“Efforts must be made to ensure that a reduction of inequalities between regions is not simply replaced with greater inequalities within regions. In particular, areas outside larger cities that have previously benefited from low-cost labour could be in danger of being ‘forgotten’ when plans for large scale infrastructure projects and other investments in skills and education are made.”
The UK Competitiveness Index measures current economic competitiveness across local and regional areas of Britain based on a basket of economic indicators.