The UK Economy
London and the Rest: Regional Gaps
Why the UK has some of the largest regional income gaps among rich countries, why northern cities lag, and the "levelling up" agenda.
The UK has large regional economic differences.
The gap
- London and the south-east have much higher productivity and incomes than many other regions.
- Northern cities like Manchester, Birmingham and Leeds have lower productivity than similar-sized cities in Germany or France.
Causes
- Deindustrialisation: coal, steel, shipbuilding and textile towns lost major employers from the 1970s-80s.
- Centralised government, with less power for cities.
- Transport: weak links between northern cities.
- Agglomeration in London attracting talent.
Levelling up
From 2019, governments pledged to “level up” poorer regions through funds, infrastructure and devolution, with mixed results.
HS2
The HS2 high-speed rail project was cut back in 2023, cancelling the northern leg, after huge cost overruns, frustrating northern leaders.
Devolution
Metro mayors in places like Greater Manchester have gained powers over transport and skills.
Comparison with India
India also has large regional gaps, like between southern and western states and parts of the north and east.
A former cotton mill town in northern England lost its main industry decades ago. Young people move to London for jobs, while the town's high street struggles.
The UK has large regional gaps.
- The UK has large regional productivity gaps.
- Deindustrialisation and centralised government contributed.
- Levelling up aimed to close gaps.
- HS2's northern leg was cancelled in 2023.
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