Short-term regional recovery cannot mask the huge levelling up challenge
Together, these factors make up the backdrop for efforts to level up the national economy. The immediate effect of COVID-19 has been to narrow the gap between London and the rest of the country in the short term, reflecting the fact that the capital has been more adversely impacted. Economic activity in London fell by 1.8% between 2019 and 2021, compared with ‘only’ a 1.5% fall on average across the UK.
However, these regional gains will be temporary. Over the next four years, the same drivers that supported strong growth in London’s economy prior to the pandemic are expected to reassert themselves, causing the differential between the capital and the rest of the country to continue to widen. These factors include London’s attractiveness as a place to live and work — as evidenced by the significantly faster growth in its working-age population — and the greater prevalence of high-growth services and technology sectors. Meanwhile, looking across the country, cities in general are rebounding faster than towns. Growth in England’s major cities is expected to average 1.2% annually from 2021 to 2025, compared with 0.9% in towns.
A holistic approach to levelling up is needed
So, taking these considerations into account, what is needed to support positive levelling up over the longer term? The main success factor will be consistent policy initiatives — including a focus on seeding faster-growth sectors, particularly leveraging green investment. Steps to retain and attract people of working age will also be critical, such as leveraging relationships with universities and employers to develop a robust sense of place and opportunity. As we move — hopefully — beyond the pandemic, now is the time to translate the fine words about levelling up into concrete action.
