London’s economic output per person is more than double the average across the rest of the UK, according to new figures that underscore the challenge facing ministers as they vow to tackle the UK’s entrenched regional inequality.
Official figures showed gross value added (GVA) per head – a measure of what is generated by economic activity in an area – was higher in London than any other region in 2015 at £43,629. That dwarfed the figure for the lowest region, Wales, at £18,002 and was also double a level of £21,638 for the UK without London.
The figures from the Office for National Statistics also showed the gap between the capital and the rest of the UK had grown over the last decade.
Responding to the latest sign of regional imbalances in the UK, the Trades Union Congress (TUC) called on the government to urgently step in with support, including investment in infrastructure projects like housebuilding, rail improvements, roads and clean energy.
“People in every part of Britain need a strong local economy, generating good jobs and improving living standards. But there is a huge gap between London and other parts of the UK,” said TUC general secretary, Frances O’Grady.
“For decades now, successive governments have failed to invest enough outside of the capital. We urgently need a proper industrial strategy that reaches every community. With Brexit on the horizon, it’s all the more important that we speed ahead with the investment needed to give every part of Britain decent jobs and strong industry.”
O’Grady said help “must be targeted at communities that have been abandoned after the loss of traditional industries, and where too many jobs are insecure and low paid”.
The Resolution Foundation thinktank, which earlier this week highlighted links between regional imbalances and support for Brexit in June’s referendum, said the latest data highlighted the challenge facing Britain’s new metro mayors due to be elected in some areas next year under devolution plans.
It noted that all cities bar London were still worse off than they were before the financial crisis, based on the GVA figures. The thinktank’s analysis showed London was on average £1,270 better off, the rest of the UK city regions were £900 worse off and the country as a whole was £450 worse off. Cardiff and Belfast were furthest from their pre-crisis GVA levels.
But the thinktank also saw some reasons to be hopeful that the gap with London would narrow in some places as the 2015 figures showed big cities enjoyed relatively strong growth in economic output last year, particularly in the North West.
Analysing big city regions, Resolution said the Liverpool city region was the top performer in terms of growth in GVA per head last year, with a rise of 3% – almost double London’s growth of 1.6%.
“This strong growth provides a good building block for their new city mayors to build on next year,” said Stephen Clarke, economic analyst at the Resolution Foundation.
“ Closing the economic output gap between the capital and Britain’s other major cities will play a central role in delivering economic growth throughout the UK over the next decade.”
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