Recent economic forecasts presented in the Spring Statement painted a relatively optimistic outlook for the UK economy.
Despite coming towards what many view as the tail end of the economic cycle, the independent Office for Budget Responsibility is expecting the UK economy to expand by 1.4% this year, and then continue to grow in future years.
This forecast comes despite continued Brexit uncertainty and an apparent slowdown in the housing market.
However, outside of London many parts of the UK face a bleak economic future.
This is according to a new UK Competitiveness Index, with academics saying significant parts of Briton should expect to experience a decline in economic growth during the next twenty years.
The index was compiled by researchers at Cardiff University and Nottingham Business School.
They reviewed the competitiveness of different localities in England, Wales and Scotland today, as well as forecasting how various parts of the country are expected to perform in the future.
The research focuses on local authority areas, offering very detailed insights about the UK’s economic prospects.
They found a widening competitiveness divide between London and other parts of the UK, which is expected to grow even more extensive during the next twenty years.
In Merthyr Tydfil, the local economy is forecast to experience the most significant economic decline, with Gross Domestic Product (GDP) per capita in the town expected to decrease by 0.56% a year.
This Welsh town is followed by Mansfield in the Midlands, and Thanet in Kent, where local economies are expected to shrink by 0.48% and 0.34% a year respectively.
In sharp contrast, Tower Hamlets in London is forecast to grow the fastest, by 7.17% a year.
It’s followed by Camden and Islington, with forecast GDP per capita of 6.97% and 6.52% respectively.
The researchers also considered an economic ‘bust’ scenario, based on a new recession or adverse trading conditions stemming from a no-deal Brexit, and concluded that only these three London boroughs would report economic growth over the next five years, with the rest of the UK lagging behind.
Professor Robert Huggins, based at Cardiff University’s School of Geography and Planning, said: “This research presents the most extensive picture of the UK’s future economic challenges.
It’s clear that whatever happens, the competitiveness gap between London and other parts of the UK is going to soar.
These are issues that will only be exacerbated by a no-deal Brexit.
“For areas such as London, which are the competitiveness leaders, they face a danger of becoming less affordable and accessible to the majority. On the other hand, there will be parts of the UK that will become increasingly disadvantaged due to a lack of opportunities for growth.”
To carry out the research, the teams considered a basket of economic indicators and measured current economic competitiveness across local and regional areas of Britain.
They found that the nine most competitive places in the UK are in London, with the City of London in the leading position, followed by Westminster, Camden, and Tower Hamlets.
Blaenau Gwent and Anglesey in Wales respectively are the least competitive localities, with Mansfield being the least competitive place in England.
Areas in Scotland have generally performed strongly in the rankings, with Aberdeen City at the top and Dumfries and Galloway the least competitive.
As well as London, much of the UK’s competitiveness is concentrated in urban areas such as Bristol, Manchester, and Cardiff.
After the London boroughs, St Albans, which has benefitted from an increase in its industrial specialisation, is the next most competitive city.
Some parts of the country have experienced the most considerable improvements to competitiveness since 2015.
These were Bromsgrove in the West Midlands, Luton in the East of England and Charnwood in the East Midlands.
Parts of the country to experience falling economic competitiveness since 2015 were Bolsover and Eastbourne.
This is due to a lack of sustainable new businesses and the investment required to establish a culture of entrepreneurship.
Professor Huggins added:
“To ensure all parts of the UK economy survive in these difficult conditions, urgent action needs to be taken by governments and policymakers.
Our data collected over the past two decades demonstrates how a lack of positive action can have lasting and serious consequences.”
When we talk about economic forecasts, these are usually on a national or global basis. It’s interesting to see this research bringing the subject down to a much more local level.