North-south divide presentation 2013

Report
Patrick Bowes
Regional Economic Intelligence Unit
REIU (Regional Economic Intelligence Unit)
The North-South Divide
A short journey through some
key facts and figures
REIU (Regional Economic Intelligence Unit)
Some basic facts and figures
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The three Northern economies are valued at £256 billion, accounting for 19.1% of the UK
economy.
The largest of the Northern economies is the North West valued at £123 billion, Yorkshire is
currently worth £93 billion with the economy of the North East the smallest (£43 billion).
By comparison the combined value of London and the South East is estimated at £475.3
billion (2011).
Some 5.4 million are currently in employment across the North (compared to 8.1 million in
London and the South East). The North West has largest number of people in employment
(2.4 million), compared to just 930,000 in the North East.
Yorkshire GVA per head is currently estimated at 81.6% of the UK average, with GVA per
head in the other Northern regions at 75% to 85% of the UK average (North East and
North West respectively)
The North’s share of the national economy has been steadily contracting over time – in
1997 the North accounted for 21% of the UK economy and by 2011 this had fallen to 19%.
The contraction in share was most evident in Yorkshire and the North West – Yorkshire
share of national GVA has contracted by 0.7pp (by 2011 Yorkshire and Humber accounted
for some 6.8% of the UK economy).
REIU (Regional Economic Intelligence Unit)
Regional GVA over time….
REIU (Regional Economic Intelligence Unit)
Comparing regions…….
GVA per head is
used to benchmark
regional performance
so that comparative
analysis can be
undertaken
London’s GVA per head
is currently estimated
To be 70% higher than
The UK average
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The UK’s North-South Divide in a
European context…….
Shows percentage above
EU 27 (PPS GDP per head)
Where 100 is the average.
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Does London distort the debate about North and
South…..
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In many ways London is unique, its is the largest economy in Europe and is consistently
ranked the number one global financial centre (despite New York and Singapore’s
aspirations).
In Europe London’s GVA per head is 228% above the EU27 average, whilst its closest rivals
(Brussels and Luxembourg) GVA per head is only 150% higher than the European average.
Does stripping out London suggest a different structural economic relationship between the
North, the UK and the South.
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Local level variation in GVA…..
……………when working with regional data it is important to note that wide variations
in local level GVA per head exist – even in London.
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Pattern of regional employment…..
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Whilst most UK regions had created jobs (in net terms) across the previous economic cycle and as the UK
pulled out of recession, it is fairly clear that the level of job creation in London and the South East is
significantly higher than in other parts of the UK.
Comparing total and FTE employment patterns suggests very strongly that the Northern regions are
creating lots of part-time jobs but correspondingly much lower levels of full-time jobs – this is also
confirmed by regional productivity trends.
REIU (Regional Economic Intelligence Unit)
The Skills gap…..
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The gap in higher level sets widened between the North and South (even during recession).
At all skill levels the gap between Yorkshire and the South widened – the only exception was intermediate
skills (NVQ level 3) where Yorkshire narrowed the gap slightly.
REIU (Regional Economic Intelligence Unit)
Regional productivity differences…
The South East has seen its productivity improve more rapidly than any UK region (including London) by 1.4pp
between 2005 and 2011 – London’s productivity peaked in 2009 and since contracted although it remains
significantly higher than the rest of the UK.
Yorkshire’s productivity contracted
by 2.7pp between 2005 and 2011,
the sharpest contraction in the
North (only the East of England
saw its productivity per worker
contract more rapidly).
REIU (Regional Economic Intelligence Unit)
Key points from a Yorkshire
perspective……
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Yorkshire and Humber’s share of UK GVA contracted by 0.7pp between 1997
and 2011.
The pattern of employment creation over the previous economic cycle suggests
that London has significantly outperformed all UK regions, and that there
is a distinct imbalance between London and most UK regions in level of fulltime salaried job creation.
The gap in higher level skills has widened between Yorkshire and
London, although Yorkshire has performed well on intermediate skills
(Yorkshire outperformed London for improvement in the workforce qualified to
level 3).
Productivity levels in Yorkshire are the lowest in England and amongst
the lowest in the UK, although unit labour productivity has performed better
than London since the trough of the recession (per worker per hour productivity
improved by 0.7pp between 2009 and 2011). Subtle, though significant
variations in the timing of regional sectoral productivity suggest that the
recession hit Yorkshire a year ahead of any visible impact on productivity levels
in London.
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Key points cont…..
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Variations in local GVA suggest that per head GVA varies between 66.1%
of the UK average (in Barnsley, Doncaster and Rotherham) rising to 6.5%
above the UK average (in Leeds).
Many parts of Yorkshire and Humber have seen their long run historical
share of GVA contract, the scale of this effect is especially apparent in Leeds
and York - in 1997 GVA per head in York was 24% above the UK average,
whilst in Leeds GVA was 22% above the UK average. Latest data from ONS
show that York’s GVA per head is now 3.7% below the national average, with
GVA in Leeds now only 6.5% higher than the national average.
REIU (Regional Economic Intelligence Unit)
And if nothing changes…….
…….this is what we think will happen to GVA
per head across the UK regions.
REIU (Regional Economic Intelligence Unit)
Discussion and Q & A
REIU (Regional Economic Intelligence Unit)

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