UK cities lag behind European competitors for skills, productivity and innovation

Jobs per region map

As the country prepares to leave the EU, most UK cities must urgently address low levels of skills, productivity and innovation to have the best chance of competing with European counterparts for the industries and jobs that offer long-term growth and prosperity.

This according to a new report, ‘Competing with the Continent’, published today by the think tank Centre for Cities, which presents an in-depth picture of how UK city economies compare to European counterparts, covering 330 cities across 17 countries.

It reveals that UK cities account for over a fifth of Europe’s urban economic output – the largest share of any nation in the continent – and play a bigger role within the national economy than cities in other European countries, contributing 60% of the UK’s national economic output (compared to just 36% in Germany and 32% in Italy).

However, the report shows that most UK cities fall below the European urban average for skills, productivity and innovation – weaknesses which must be addressed to help cities across the UK to compete globally, particularly for the knowledge-intensive firms and jobs which are increasingly important for boosting growth, employment and wages:

• Nine out of ten UK cities (57 out of 63) perform below the European average in terms of productivity, and more than half (39) are among the 25% least productive cities in the continent.

• More than three out of four UK cities (48) have a lower proportion of high-skilled residents than the European average. UK cities are also home to the third highest concentration of low-skilled residents in the continent, behind only Spanish and Polish cities.

• Only two UK cities (Cambridge and Oxford) are in the European top 20 for innovation, and around four out of five (49) fall below the continental average. Despite its vibrant economy, London only generated 8 patents per resident in 2011, compared to 26 patents per resident in Paris and 10 in Berlin.

• The UK economy relies on a handful of high-performing cities for growth. London, for example, is the biggest economy in Europe, and accounts for a quarter of the UK’s economic output – more than Paris’ contribution to the French economy (20%), and significantly bigger than Berlin’s role in the German economy (4%).

Given these findings, the report argues that strengthening UK city economies – by tackling skills-gaps and empowering places to boost local growth – must be a top priority for the Government in its new industrial strategy, and in the forthcoming autumn statement.

Paul Watson, Leader of Sunderland City Council and Chair of the Key Cities Group said:

“This reports highlights the urgency of the our situation. We rely on our cities more than our European competitors, but we’re behind on skills, on productivity, and on wages, and we’re too concentrated as an economy. Now with the referendum result, we need to make major investments in our people and in our country, or the opportunities of the 21st century will pass us by.”

Commenting on the report, Alexandra Jones, Chief Executive of Centre for Cities

“No other economy in Europe is so dependent on the performance of its cities, yet too many of the UK’s urban areas are failing to realise their potential. For the country to thrive in the years to come, it’s vital that the Government works with cities to address the skills and productivity gaps holding most places back.

“In particular, the Government should ensure that any new funding commitments in the Autumn Statement focus on boosting the key drivers of growth in cities, such as skills, transport and housing. Over the long-term, it should also build on its devolution agenda by giving places the powers they need – and which European counterparts already enjoy – to grow their local economies.”

Click below to view report- Competing with the Continent