The North-South divide widens despite massive Government investment to close gap

  •  Peterborough sees fastest economic growth over last five year period
  • Blackpool slowest growth and lowest GDP generator

The economic divide between the North and the South of the country has continued to widen over the last five years despite huge Government investment to close the gap, reveals research by UHY Hacker Young.

In the last five years (to Jan 1 2008*), the economy in the North of England and Wales grew by 22% on average compared to an average of 23.1% for the South** (based on Gross Value Added).

Gross Value Added (GVA) is used to estimate the value of goods and services produced in an area to measure its contribution the overall UK economy.

The research, which ranks the UK’s 40 largest towns and cities by their GVA growth over a five year period, also found that all six towns and cities with the slowest economic growth are in the North. (Full results below)

Each person in the North generates an average of just £18,697 per year whilst in the South, each person contributes to the national economy by an average of £22,670 per year (based on the Top 40 towns and cities).

Commenting on these results, Marc Waterman, Partner at UHY Hacker Young says: “If the regeneration of the north was working properly this gap in economic growth would be closing not getting wider!”

“Whilst there are many Northern cities like Manchester that are now economic powerhouses there is too long a tail of Northern towns that suffer from low economic growth and high unemployment. These cities still haven’t found their feet after the last recession.”

“Despite the billions the Government has spent on regeneration there are still too many Northern towns that are struggling to find their place in the modern economy. It is worrying as these figures cover several years in which Government support for regeneration in the North has been pretty generous.”

According to UHY Hacker Young, the six towns and cities with the slowest economic growth are Blackpool, with a GVA growth over the last five years of 12.9%, followed by Dudley (13.4%), York (13.8%), Bradford (14.2%), Leicester (15.9%) and Hull (16.3%).

Says Marc Waterman: “You might have expected the crisis in the financial services sector to close the gap between the North and South but the opposite seems to have happened. Unemployment in the North has risen far faster than in the South.”

“Currently the North generates 21.2% less for the economy than the South and there is concern that the situation will only get worse as tighter public finances put many publicly funded regeneration programmes onto the backburner.”

According to National Statistics, the North still has a stubbornly higher unemployment rate than the UK average of 6.9%, with unemployment rate at 8.8% in the North East, 7.6% in the North West and in Yorkshire and the Humber, and 7.7% in Wales.

Peterborough sees fastest growth

UHY Hacker Young’s research found that with a jump of 44% in its GVA contribution to £26,968 per capita per year over the last five years. Peterborough was the fastest-growing economy of all the Top 40 UK urban areas.

Marc Waterman comments: “Peterborough’s central location and good transport links make it an ideal place for major distributions centres for companies like Tesco and Debenhams.”

“Peterborough has also benefited from marketing itself as the host to a cluster of environmental businesses. That fast growing sector is already worth 5% of the city’s GDP.”

“Its relative proximity to London and cheaper offices also makes it very attractive for companies looking to relocate their back office.”

Blackpool worst in class

According to UHY Hacker Young’s study, Blackpool picks up the ‘wooden spoon’ with a GVA amounting to £12,390 per capita per year and the lowest growth over the last five year period (13%).

Marc Waterman comments: “Despite seeing a huge decline in the number of visitors since the arrival of mass market air travel, Blackpool’s economy has still not managed to diversify away from tourism. Blackpool has too many small businesses in the tourism, retail, hotel and restaurant industry that struggle to stay profitable and just won’t be able to support the investment needed to upgrade their facilities.”

UHY Hacker Young says that Blackpool is attempting to promote business activity in the high value economic sectors, but the city strongly lacks the skills needed to feed its growth.

Comments Marc Waterman: “Blackpool may have technology parks offering cheap rents but innovative businesses need skilled labour. A ‘build it and they will come’ approach could take years to bear fruit.”

“It will be difficult to convince companies in the technology and creative sectors to relocate to Blackpool if they know they will struggle to source the talents they need from the local workforce.”

According to the ONS, 20% of Blackpool’s active residents have no higher or vocational training at all compared to an average of 12.4% for the whole of Britain.

Gross value added (2007 – latest figures available)

Rank City/Town 2007
(£ per head)
5-year change
1 Peterborough 26,968 43.80%
2 Belfast 30,172 37.20%
3 Bournemouth & Poole 20,014 35.70%
4 Liverpool 18,737 32.70%
5 London 33,694 32.50%
6 Dundee 17,335 31.80%
7 Edinburgh 32,697 30.80%
8 Newcastle 18,361 30.50%
9 Glasgow 27,009 30.00%
10 Sunderland 17,411 29.90%
11 Plymouth 16,377 27.10%
12 Sheffield 17,394 27.10%
13 Telford 18,792 26.80%
14 Luton 21,100 25.60%
15 Northampton 19,901 23.90%
UK Average 20,977 23.40%
16 Manchester 18,027 23.10%
17 Swansea 15,717 22.50%
Average England & Wales 20,172 22.40%
18 Nottingham 26,106 22.20%
19 Swindon 30,116 22.00%
20 Aberdeen 25,855 21.70%
21 Cardiff 21,195 21.40%
22 Portsmouth 21,154 21.20%
23 Milton Keynes 29,112 21.00%
24 Southampton 21,423 20.80%
25 Preston 15,940 20.50%
26 Derby 23,167 20.10%
27 Leeds 22,387 19.80%
28 Wolverhampton 16,053 19.60%
29 Birmingham 19,358 18.40%
30 Brighton & Hove 20,562 18.40%
31 Stoke-on-Trent 15,005 18.30%
32 Coventry 18,848 17.50%
33 Southend-on-Sea 15,728 17.40%
34 Bristol 26,675 17.20%
35 Hull 16,571 16.30%
36 Leicester 21,331 15.90%
37 Bradford 15,249 14.20%
38 York 20,048 13.80%
39 Dudley 15,117 13.30%
40 Blackpool 12,390 12.90%

* 2002 to 2007 – latest data available (ONS)
** For the purpose of this research the South is defined as all towns and cities in England located under a horizontal line under Birmingham. The North comprises Wales and all towns and cities in England above the same horizontal line.