UK cities need good growth, not just GDP growth

20 November 2012

By Nick Jones, Global Director of PwC’s Public Sector Research Centre and John Hawksworth, PwC's Chief Economist


Britain’s long and winding road out of recession is understandably causing policymakers and commentators to focus attention on quarterly GDP figures as the key indicator of the country’s economic health. However, our research over the last two years on good growth has shown that the UK public believes there is a wider scorecard of factors beyond GDP which can be used to measure economic wellbeing. 

The public considers traditional measures of economic success – jobs and income - as critical, but other factors such as health, work-life balance, transport infrastructure and affordable housing also feature as important (see this previous post for more on the original findings).  The challenge for politicians and officials is to factor these priorities into their national economic strategies and also to use these measures when making decisions on the allocation of resources and prioritisation of investments locally, both within and between cities.

To further this understanding, we have taken the Demos-PwC Good Growth Index to the next level of detail, using sub-regional data to understand further the relationship between cities and their hinterlands. The results suggest that some of the traditional perceptions of a north – south divide could be outdated. For instance, our Index ranks some of the UK’s regional cities including Aberdeen, Warrington & the Wirral, and Belfast higher than some of the UK’s biggest cities including Birmingham, London, and Manchester. The latter performed below the UK average for good growth measures, contrasting public and expert views on what makes a city attractive.

Above average  cities for ‘good growth’ in the report included Aberdeen, Bristol, Oxford, Preston, Portsmouth, Southampton and Stoke on Trent.  They tend to do relatively well on jobs, income and health, as well as providing for the future and the environment. However the results suggest there is a price to be paid for this relative success, seen in relatively low scores for work-life balance and housing affordability in these cities.

London’s results also present a paradox. The recent Cities of Opportunity report conducted by PwC in conjunction with the Partnership for New York City examined the social and economic performance of 27 of the world’s leading cities and named London in the top ten in all bar two of the indicators. See last month’s blog for more on the  findings. London also ranked highly as a city of great cultural vibrancy, intellectual capital and innovation.  However, the popularity of the city as a leading international business centre brings its own challenges, and measured against the wider range of publicly defined ‘good growth’ criteria such as affordable housing, transport, income distribution and working hours, London slips below the UK overall average for ‘good growth’.

It’s not, however, a question of whether one measure or approach is right or wrong. What the research tells us is that we need to shift from a narrow focus on GDP or Gross Value Added (GVA), to a more holistic measure of a place’s success – and its potential. Our findings suggest measuring good growth could, particularly in times of austerity, help government and local public bodies focus their investment and resource allocation on the things that matter most to the public.

Click here to download a copy of the Good Growth for Cities report.

You can read more articles from our economists on a variety of topics on our Economics blog:

http://pwc.blogs.com/economics_in_business/


Contacts

Email: Nick C Jones

Email: John Hawksworth

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