The North West of England’s Productivity Challenge: Exploring the Issues
The Productivity Institute’s eight Regional Productivity Forums have written an extensive agenda-setting analysis for each of the five English regions and the devolved nations of Wales, Scotland and Northern Ireland. This includes historic regional context, key issues and future research priorities. Alongside this is an executive summary: a high-level overview highlighting the productivity picture in their area, including a scattergraph showing the disparities within on a NUTS3 level in comparison with the UK average, the primary drivers and bottlenecks, a SWOT analysis and a look to the future. Both can be downloaded on the right of this page. These were written with the support of the North West Productivity Forum.
North West of England
The North West of England is made up of five distinct but interconnected sub regions: the two major cities and urban agglomerations that surround Manchester and Liverpool and the networks of smaller cities, towns and rural communities that make up Lancashire and Cumbria to the north and Cheshire to the south. The region is home to 7.3 million people (2019), and the third most populated region in the UK.
The North West is in the middle range of regions in terms of the level of productivity. In 2019 output per hour was 9.6 % below the UK average, which was higher than in the Midlands, the North East, Yorkshire and Wales, but well below the East of England, London and the South East. The region still bears the legacy of its rich industrial past. It retains, by UK standards, a large manufacturing sector, although at 9% of jobs it is less than half the size it was in the early 1980s but still with the highest productivity level of any region.
Many service sectors are now bigger employers, including retail, health and social care, business & professional services, and hospitality & tourism, which have generally lower productivity levels than in manufacturing. However, the region has seen a dismal productivity growth rate, which has even slightly fallen over the past decade, with only Yorkshire and Humber showing an even larger fall. Weak productivity growth affects almost all parts of the North West’s economy including both frontier and foundational sectors.
At present, there are a range of new emerging clusters linked to leading edge R&D capabilities in sectors such as life sciences, chemicals, advanced materials, digital industries, and nuclear energy. However these new activities have not yet translated into more broad-based prosperity, with the North West experiencing significant levels of deprivation and spatial inequality. Improvements in regional connectivity, digitalisation, skills and health, and stronger coordination and collaboration are needed to strengthen the region’s innovation ecosystem and improve productivity more broadly across the region.
Authors Richard Allmendinger, John Holden, Marianne Sensier