New report shows continued north/south divide in U.K. city performance

London-based Centre for Cities yesterday released the 2016 edition of Cities Outlook, which examines the economic performance of the United Kingdom’s largest cities. It comes just a couple of days ahead of the Metropolitan Policy Program issuing a new expanded Metro Monitor, which similarly aims to describe the state of U.S. metropolitan economies.

The analysis arrives at a particularly important juncture in the United Kingdom’s urban policy debate, one that may hold lessons for the relationship between U.S. cities and their federal and state partners.

Overall, the Cities Outlook portrays continued divergence in the economic performance of cities in the U.K.’s north and south. Of the 62 cities analyzed in the report, 29 exhibited wages below the national average, and welfare spending above the national average, in 2015. The vast majority (25) are located in the U.K.’s northern regions, such as Newcastle and Sunderland in the North East, and Manchester and Liverpool in the North West, and Birmingham and Stoke in the West Midlands. By contrast, 11 of 14 “high-wage, low-welfare” cities are located in the country’s southern regions, most notably in and around Greater London.

This reflects a longstanding regional pattern in the U.K. economy, as the report notes. Northern cities have longer-run structural weaknesses in skills and productivity resulting from de-industrialization, not unlike many older industrial cities in the U.S. Midwest and Northeast. High-value professional services jobs and educated workers, meanwhile, have been increasing for decades in southeastern U.K. cities, akin to many large coastal and Sun Belt metro areas in the United States.

This is the context in which the current U.K. government, particularly Chancellor George Osborne, has sought to devolve considerably greater taxing and spending powers to metropolitan regions. Many regions in what Osborne termed the “Northern Powerhouse,” starting with Greater Manchester, have agreed to elect “metro mayors” as part of agreements with the central government to gain greater authority over spending on education and skills, housing and planning, and transportation. Leaders in Whitehall hope that these greater authorities and responsibilities will enable regional leaders in the North to better align various investments to areas of local economic strength, achieving higher-quality economic growth even as central government cuts subsidies to local governments. Whether these steps will significantly close the gaps revealed in Cities Outlook remains to be seen; nonetheless the interest shown by the Northern regions is promising.

The economic and governance situation in the United States is distinct from that in the United Kingdom in many ways. In particular, we have many more major city-regions that exhibit even greater regional economic diversity; and taxing and spending powers are already much more devolved to our local governments.

Yet the U.K.’s drive toward more “joined-up” economic strategies for deploying national resources at the metropolitan level makes a great deal of sense for U.S. metro regions. As this week’s Metro Monitor will reveal, even U.S. city-regions considered to be economically vibrant are not consistently succeeding at raising standards of living for all their residents. Further empowering U.S. metro areas to use federal resources strategically, especially as those resources wane over time, may well be an approach worth importing.