1Patrick Bowes Regional Economic Intelligence Unit
2The North-South Divide A short journey through some key facts and figures
3Some basic facts and figures 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).
5Comparing regions……. GVA per head is used to benchmark regional performanceso that comparativeanalysis can be undertakenLondon’s GVA per headis currently estimatedTo be 70% higher thanThe UK average
6The UK’s North-South Divide in a European context……. Shows percentage aboveEU 27 (PPS GDP per head)Where 100 is the average.
7Does London distort the debate about North and South….. 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.
8Local 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.
9Pattern of regional employment….. 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.
10The Skills gap…..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.
11Regional 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 contractedby 2.7pp between 2005 and 2011,the sharpest contraction in theNorth (only the East of Englandsaw its productivity per workercontract more rapidly).
12Key points from a Yorkshire perspective…… 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 full-time 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.
13Key points cont…..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.
14And if nothing changes……. …….this is what we think will happen to GVA per head across the UK regions.