1. Economics
May 7, 2015

Which British city has had the worst recession?

By Jonn Elledge

Last week saw the launch of a whizzy new cities data site. A joint venture between the Centre for cities and the Future Cities Catapult, the imaginatively named Cities Data Tool allows you to press a few buttons and instantly compare the infrastructure and economy of Britain’s 64 biggest metro areas.

Those are our sort of buttons – so we’re going to be playing with this new toy rather a lot, I suspect. But being the cheerful sort of people that we are, and this being election day, we decided to start out by finding out which British cities have seen the most knackered economies of late.

Here are the bottom 10. You can click on the dots to see their names and growth in one measure of the size of each city’s economy (Gross Value Added, or GVA) over the last five years.

There’s quite a range here. Even in these weaker economies, most of the cities are still growing, several by more than 1 per cent a year. (Least bad here is Hull, which grew by 4.84 per cent in four years.)

However, this isn’t sign of a previously unnoticed economic boom, alas: GVA is simply the total value of a city’s economy, and all of these cities experienced some degree of population growth.

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One mystery outlier here is the southern English city of Luton. It’s a London commuter town – which generally offers a degree of shelter from the economic storm – and its population grew by 6 per cent between 2009 and 2013. Yet its GVA fell by more than 7.7 per cent: that, a back of an envelope calculation suggests, means that the city’s wealth per head fell by 13 per cent in four years. That’s dreadful.

It’s not that a lot of businesses closed, either. Luton only lost 4.3 business per 10,000 of population in those four years, making it one of the better performers.

Look at the data more carefully, in fact, and you’ll find that most of the fall in Luton’s economy actually happens in just one year, between 2009 and 2010, when its GVA falls by 7.3 percent. And terrifyingly, this fall relates to just a handful of corporate decisions. To quote a Centre for Cities blogpost from February 2013:

Although the flow of business closures stemmed during 2009-12 and house prices recovered, real weekly wages fell by £86. This was due in part to job losses at Vauxhall, a significant local employer. The firm pays relatively high wages and, as a result, the 350 jobs lost in 2009 had a significant impact on the city’s economy.

A significant drop in the number of passengers passing through the airport, the other major employer, also contributed to poor economic performance. Most significantly the decision of EasyJet to reduce its presence in the airport  affected the 550 strong workforce employed by the airline in Luton.

The think tank’s in-house economist, Paul Swinney, points to another factor: an increase in the number of people living in Luton but working elsewhere would make the city appear to be growing less productive. (Similar patterns have been seen in Swindon and Northampton, he notes.) Nonetheless, the lesson for cities is clear: for heaven’s sake don’t be a one company-town.

Here’s all the data used in this story:

You can find the data tool here. Or you can just keep reading CityMetric because, frankly, we’ll be using it a lot.

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