Birmingham and Coventry shine in city growth league table

Improvement in skills, new businesses, jobs and income have seen a decade of growth for West Midlands cities, according to a report which names Birmingham as the fifth fastest improving city in the UK.

According to the latest Demos-PwC Good Growth for Cities 2018 index, that ranks cities on a combination of economic performance and quality of life, Birmingham has performed above the national average across a range of measures, including work-life balance, new businesses and income distribution. However, a price of success for the city is below average for house price to earnings.

Meanwhile, Coventry was named as the eighth highest performing city in the UK scoring at or above the national average on all measures. Wolverhampton and Walsall has only one measure (skills) below average, but scores lowest overall as compared to all Midlands cities.

The Good Growth for Cities 2018 index index measures the performance of 42 of the UK’s largest cities, England’s Local Enterprise Partnerships (LEPs) and the nine Combined Authorities, against a basket of ten indicators based on the views of the public as to what is key to economic success and wellbeing.

Birmingham has increased its index score by 0.33 since the 2005-7 index, compared to an average increase of 0.29 for all cities. This has primarily been driven by an improvement in skills of 25-64 year olds and a strong improvement in new businesses helping to drive increases in jobs and income.

Improving average skills levels for the UK’s youngest workers and driving new business formation have been the strongest drivers of good growth over the past decade, while unemployment levels have fallen back to around pre-crisis levels.

However, this long-term retrospective analysis also highlights areas where there have been structural deteriorations for cities across the UK, particularly around reduced housing affordability and owner occupation rates and steep increases in average commuting times.

These longer term trends contrast with shorter term movements in the index, which have been driven primarily by falling unemployment rates and, in part due to this, higher overall household income levels.

The latest Index analyses a decade of economic and social data to determine what long-term factors drive good growth. PwC analysis shows that the average city in the index has improved its good growth score significantly over 10 years from 2005-7 to 2015-17, and has now more than recovered from the recession and downturn triggered by the global financial crisis.

Matthew Hammond, Midlands region chairman and PwC’s Birmingham office senior partner, said: “The growth story for the West Midlands is compelling given the attractiveness of the region nationally and globally. I’m delighted to see Birmingham and Coventry recognised amongst the fastest improving and highest performing UK cities across a range of measures, including jobs, income, skills and health scores driven by a growth in new businesses.

“We have seen a decade of continued improvement, above the national average, at a time of significant investment in the region. The collaborative approach across the private, public and education sectors has been key, and remains so, to ensuring that the potential of the young population of this region is given opportunity to work in attractive businesses across the Midlands.

“Continuing to attract UK business investment, foreign capital and investment is vital if the Midlands is to make a difference to the next generation and those to come, from the unprecedented opportunities provided by HS2, Metro, Coventry City of Culture, Commonwealth Games 2022, the 5G ‘test bed’ and the related infrastructure investment.

“As compared with other regions of the UK it is particularly pleasing to see the results of the work of all agencies in attracting businesses to the region. Each of the LEP areas across the West Midlands, Black Country, Greater Birmingham & Solihull and Coventry & Warwickshire have materially improved the new businesses growth data in their areas.

“Performance of the Combined Authorities shows that the West Midlands Combined Authority’s strengths were indicators for work-life balance and new businesses, and its areas for development were income and skills amongst 25-64 year-olds.

“Having largely recovered from the financial crisis, addressing the housing and infrastructure supply constraints that drive these negative trends will be key challenges for the next decade for both central and local government, looking beyond the immediate issues around Brexit.”

The top 10 highest ranked cities in the latest index, which relates to the period 2015-17, and the most improved since last year’s index were:

Source: PwC analysis