Rosalind Evans
Investor appeal in London and the south-east intensifies, leaving other UK regions trailing, reveals a university research study.
In the past year, a study indicates that London, along with certain south-east regions, has proven more tempting to investors than other parts of the UK.
A joint analysis from the University of Cardiff and Nottingham Business School showed that among 362 regions spanning England, Scotland, and Wales, London boroughs made up nine of the top 10 in a competitiveness index. Runnymede, located to London’s west, secured ninth place, nestled between newcomer Hackney and Southwark.
Researchers highlighted that London and the home counties, including frontrunners like the City of London, Westminster, and Camden, expanded their economic edge over other British regions. Only East Anglia and Cambridgeshire could keep stride with the capital, a phenomenon attributed to their close ties with London.
According to the researchers, “The east of England is gradually distancing from the rest of the country. A location’s nearness to London is evolving into a crucial factor for its competitiveness and prospective economic expansion. This will amplify the nation’s dependency on growth in the capital and its neighbouring zones.”
Camden’s vibrant cultural scene was particularly highlighted, paired with optimal transportation, a skilled workforce, and suitable housing for high-earning workers. The study mentioned, “Camden stands out as an ideal spot for the creative elites who foster innovation and craft a magnetizing ambiance for their peers.”
Hackney witnessed a spike in new businesses over the past year, resulting in its 10-place climb between 2019 and 2023, closely mirroring Camden’s cultural characteristics.
Conversely, the least competitive regions were spread widely across England and Wales, with East Lindsey, encompassing the Skegness resort, bottoming the list. The study cited its economic reliance on agriculture and food production, sectors heavily impacted by reduced access to affordable EU labour, as probable reasons for its drop in competitiveness.
Locations like Skegness, they remarked, offered little for businesses, reflecting a two-decade-long trend seen in many east coast resorts.
Other low-ranked areas included Blaenau Gwent, Merthyr Tydfil in Wales, and Torbay and Gosport in southern England.
The authors explained competitiveness as a region’s ability “to attract and retain firms without compromising the quality of life of its inhabitants.” They further noted that while low costs might lure some businesses, it doesn’t necessarily translate to enhanced living standards or genuine competitiveness.
The Chancellor, Rishi Sunak, emphasized his vision for the UK to nurture a high-wage economy, appealing to local and international businesses investing in skilled labour.
Mark Gregory, formerly EY’s chief economist and now a professor at the University of Staffordshire, pointed out the study’s limitations. He mentioned that despite London’s cultural allure, rising housing expenses make it less appealing for young professionals. Gregory stated that low-wage regions might still be great places to live and work.
He added that business perceptions of a region play a pivotal role in their location choices. “Tech companies gravitate towards youth-friendly regions with a solid infrastructure. In contrast, pharmaceutical ventures prefer proximity to universities.”
Between 2019 and 2023, the study highlighted significant progress in competitiveness rankings for places like Folkestone and Hythe, Bury, Wolverhampton, and Worcester. Wolverhampton’s potential benefits from the HS2 railway and Worcester’s appeal to professionals post-pandemic, thanks to its closeness to the countryside, were particular standouts.
As Britain grapples with shifts in the economic landscape, the divergence between London, the south-east, and the rest of the country becomes ever more pronounced. Regional disparities are not new, but their amplification poses significant challenges for policymakers seeking a balanced and inclusive growth strategy. Addressing these inequalities will require a holistic approach, considering factors from infrastructure and housing to education and cultural enrichment. As the nation stands on the cusp of a new era, only time will tell if more regions can rise in competitiveness or if London and its neighbours will continue to overshadow the broader landscape.
