The Problem With Britain: The Graph That Explains Manchester's Economy

Why do Britain's big regional cities underperform? There is a wealth of evidence that — for their size — they are serial underperformers, with less wealth and less power than equivalent European cities. There is a 30% gap in productivity (per head) compared with European rivals.

Now new data analysis published by City Metric has explained the problem: whilst in Europe getting bigger helps cities get wealthier, in the U.K. the effect is the opposite. Big cities are less than the sum of their parts, economically speaking.

The so-called agglomeration benefit is very marked in French and German cities, and strong in the U.S. In Scandinavia the agglomeration benefit is so strong that even small cities have extremely powerful local economies.

But in the U.K. (and in Spain) the agglomeration effect is very weak or actually in reverse. "Remove London from the graph of U.K. cities, and the larger a city gets, the poorer it is. This doesn’t happen in France or even in Spain," City Metric's Tom Forth said.

The graph shows how the trend line points to larger cities having progressively lower GVA per head. There appears to be no agglomeration benefit outside London.

"I think that we can fix this," Forth said. "The Northern Powerhouse is the right strategy; metro mayors will help, moving things the way that we moved 10% of the BBC to Manchester will help; and investing in transport and science in big cities where businesses want to grow will help.

"But my faith in all those things is based on a belief that we can make our country more German, French, American and Dutch in terms of agglomeration benefits. I hope that I’m right."