Economic output is distributed unevenly across the country. While it has long been understood that economic activity has been skewed towards London and the South East, the analysis below helps us to understand the dynamics of the within-region inequality in output.
What does the chart show?
The chart displays Gross Value Added (GVA) data for the English regions as well as Scotland, Wales, and Northern Ireland. The top chart exhibits GVA per capita in pounds, whilst the bottom chart shows the growth rate of each region’s GVA. Use the filter at the top to select as many regions as you would like to analyse, or select a particular region in the box below to highlight it. It may be useful to deselect London and the South East when comparing any of the other regions in the top chart.
Why is the chart interesting?
The chart displays the clear dominance of London in terms of economic output. During the period of analysis, its average growth rate of 4.5% was the highest of all regions. Spectacularly, it took until 2017 for any region outside of the South East to match its 1998 per capita GVA.
Outside of London, UK regions have largely similar experiences, with changes in GVA reflecting the wider economic cycle. Nonetheless, the growth rates present an interesting point of analysis. The West Midlands experienced the slowest growth rate through much of the period between 1998 and the financial crisis, but rebounded incredibly strongly and managed to achieve consistently high growth in GVA per capita relative to the rest of the UK in the aftermath of 2009. The average UK growth in GVA up to 2008 was 4.7% compared to West Midlands’ 3.7%, while the UK average from 2010 to 2019 stood at 3.4% compared to the West Midlands’ 3.9%. A large reason for this is the additional 775 foreign direct investment projects that the West Midlands Combined Authority received since 2010.
Nevertheless, London’s dominance is clear to see in both charts, having both the highest growth rates as well as the highest GVA per capita. London and the South East are the only regions that are over the UK average GVA per capita, and London is almost two times that average. There is, however, considerable variance in GVA per capita within London, with Camden and the City of London over £400,000, whilst Redbridge and Waltham Forest stood at £15,000 in 2020. Despite this, the relative dominance of London has only increased since 1998, when its GVA was 77% above the UK average. It is now 96% above.
Inequality has also increased within all regions of the UK. On average, the highest GVA areas in each region contributed 3.3 times the lowest in 1998. This rose to 4.3 times the lowest contributor by 2020. This inequality is far from being distributed equally, however. In 1998, the highest GVA area in London contributed 17 times the lowest. This rose to a staggering 26 times the lowest in 2020; over a 50% increase during the period, whilst the rest of the UK experienced a 16% increase on average.
By David Dike