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Economy Economy

Close the gap in prosperity between London and other cities

Last updated: 09:35pm 27 November 2019

We have seen welcome growth and civic renewal in some major cities. There remains, however, a far greater gap between the capital and other cities in the UK than in any other major developed country. We see the opportunity to close this gap as the biggest prize in Britain today. It will be a great endeavour by government, business and civic society over many years. We are determined to lead the way in the next parliament.

Conservative Party Manifesto 2017, p.24

Our verdict

In 2017, the Greater London area accounted for nearly 24% of all economic activity in the UK. According to analysis by the Institute for Fiscal Studies, London’s economy grew by 3.1% per year on average between 1998 and 2017, compared to 1.9% for the country as a whole. Median household total wealth in London is more than five times as much as in the North East. This is a pledge to “lead the way” in reducing regional inequality and closing the gap between London and other cities.

As part of an attempt to rebalance the economy away from London, the government has implemented various measures, including, for example, city and region deals, major infrastructure upgrades for the North and relocating the public estate. It also promised to establish a new Shared Prosperity Fund to replace EU funding for poorer regions, but has yet to publish its consultation on that policy.

These and other policies aiming to rebalance the UK economy are at various levels of progress, but regional inequality remains a problem. Successfully leading the way in closing the gap between London and other cities requires evidence that the gap has at least stopped growing. From the start of 2018 to the start of 2019 the London economy grew at twice the rate of the UK economy as a whole and outstripped growth in all other British regions.

There are certainly debates about the most accurate way to measure inequality, but overall we believe the evidence supports the declaration in May 2019 by the chair of the UK2070 Commission inquiry into city and regional inequalities in the UK:

“…despite the government initiatives…the economic disparities, particularly between London and the wider south east and the rest of the UK have grown.”

In terms of leading the way to close the gap, this policy is ‘not started’.

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