Northern productivity powerhouses: How Manchester, Humber and North East could help bridge the north-south divide

Lord Jim O'Neill wants to tackle productivity issues in the north

Parts of the North West are seeing a “productivity resurgence” - and a leading thinktank says those areas could help inspire more growth in the North and across the UK.

Productivity is seen as a big issue for the UK economy as a whole, with output per hour lagging behind levels in the US and Germany, particularly since the global financial crisis. Experts say that if the UK can become more productive, it will have a big impact on economic growth.

The Northern Powerhouse Partnership (NPP)’s latest study of English productivity shows the North East and North West have outperformed average productivity growth across England between 2022 and 2004, the year data was first available.

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London’s productivity growth over the period was the second lowest in England, behind the East Midlands. But the capital remains the most productive region in the UK, with productivity around 27% higher than the UK average in 2022, falling from 33% higher in 2004.

Productivity in the North remains well below that of London and the South East overall, and the NPP says bridging that gap will be vital to future growth - which is why the Productivity in the Northern Powerhouse report focuses on some success stories. The study says Cheshire remains one of the highest 10 areas of productivity in all England.

Looking at productivity growth, the research shows the North’s success has been concentrated in a few key areas, with Greater Manchester seeing a 26.4% increase - the largest increase in the country. It says that success can be attributed to substantial transport improvements across the city region, and to strong and unified local leadership.

The Humber saw 20% growth in productivity over the period thanks to the success of its industrial cluster as it adapts to the energy transition and its success at attracting international businesses such as Siemens and Phillips 66.

The only other Northern subregions to outperform the average productivity growth across England were West Yorkshire, Northumberland and Tyne and Wear, as well as the Tees Valley and Durham.

The NPP says: “Boosting productivity would not only boost tax revenue for the Treasury, it would mean higher wages and better living standards for people across the North.”

Lord Jim O’Neill, chair of the Northern Powerhouse Partnership, said: “While London’s productivity growth has been weak in recent years, particularly since the pandemic, we’re seeing pockets of success in parts of the North, especially Greater Manchester, the Humber, West Yorkshire, and parts of the North East.

“In Greater Manchester - which has seen the strongest growth in the country - local leadership has been laser-focused in delivering a consistent, ambitious economic vision targeted at inward investment and key productivity drivers such as transport is paying dividends now.

“With the right focus and determination, other areas could see the same kind of progress. This would not only be a victory for these local economies themselves and the local workers who will benefit from higher wages, but will deliver a massive boost to the UK economy as a whole.

“It goes without saying that a more stable and committed policy towards England's regions from the next government, whoever it is, should enable further positive progress.”

In his foreword, Lord O’Neill said he hoped the leaders of other city regions could reflect on Manchester’s success given its early embrace of devolution and “focused and quite stable leadership and ambition”. He said then its productivity success “can be replicated in their area, and in some, hopefully not so distant years, we will be seeing their improvements reflected in their productivity data also. Because then, the country will increasingly start to feel a better more successful, wealthier and perhaps even happier country.”