Plymouth has topped the latest Demos-PwC Good Growth for Cities Index for 2024, outperforming other UK cities in terms of income distribution, work-life balance, jobs, and skills.
Bristol followed closely, rising to second place, while Southampton retained its third position. The Index evaluates cities based on public perceptions of 12 key economic indicators, including employment, health, income, safety, skills, and housing.
Cities across the South West of England, such as Plymouth, Bristol, Swindon, and Exeter, consistently scored above the UK average, particularly in areas like health and safety and skill levels. Despite these successes, South West cities performed less well in categories like new business creation and housing affordability, with house prices continuing to outpace wage growth.
Economic Growth in the South West
The Demos-PwC Good Growth for Cities Index ranks the 51 largest cities in the UK, including the London boroughs, based on factors such as jobs, income equality, housing affordability, health, and business start-ups. In the South West, cities like Plymouth, Bristol, and Swindon have shown robust performance in health, safety, and skills, reinforcing their status as strong performers in the Index.
However, the challenge of housing affordability remains prevalent across the region, with house price-to-earnings ratios falling behind, highlighting a broader UK trend. This affordability issue has seen many people priced out of living in cities as wage growth fails to keep up with rising housing costs. In some regions, house prices have reached over eight times the average earnings, compared to just four times in the 1990s.
While the South West has maintained its strong position, cities in Yorkshire and the East of England have seen the greatest improvement. Lincoln emerged as the most improved city, driven by progress in income distribution and job availability. York and Hull followed closely, also showing gains in similar categories.
Meanwhile, traditionally high-ranking cities such as Oxford and Milton Keynes have seen a decline in their performance. These cities were marked down due to poorer results in income distribution, housing, and the state of high streets and local shops.
Inequality in Housing, Jobs, and Education
PwC’s research highlights a growing inequality of access to essential services, including housing, jobs, and education. According to Rachel Taylor, Government & Health Industries Leader at PwC, this disparity is not only visible between regions but also within individual cities. She emphasised that for the UK to foster economic growth, the focus needs to be on providing access to jobs, skills, education, and affordable housing.
Taylor commented, “There is an increasing imbalance within and between neighbourhoods, driven by disparities in access to quality education, jobs, and housing. If we are serious about economic growth as a country, we need to provide people and places with the foundations on which they can fuel that growth.”
This growing inequality is seen in cities with the highest demand for social housing, including London, Birmingham, Manchester, and Newcastle, which rank among the lowest performers in the Index. These cities struggle with long waiting lists for social housing and rising house prices that outpace earnings.
Future Economic Growth Prospects
Despite ongoing challenges, PwC expects the UK economy to show signs of recovery in 2024 and 2025. Cities that are home to sectors such as transportation, public defence, and construction are projected to perform well. Cardiff, Ipswich, and London are forecast to experience the strongest growth, with London predicted to lead the way due to its booming technology, professional, and administrative services sectors.
London is expected to see growth rates of over 2.9% by 2025, largely driven by its strong technology sector. However, even top-performing cities like Plymouth, Bristol, and Swindon are predicted to have average economic outlooks for 2024, similar to lower-ranking cities such as Birmingham and Nottingham.
Carl Sizer, Chief Markets Officer at PwC, pointed out that while cities face individual challenges, they share a common goal of pursuing sustainable and inclusive growth. He noted that the new UK Government is moving forward with legislative plans aimed at addressing key issues, such as reforming the planning regime, improving workforce readiness, and investing in infrastructure and skills development.
However, Sizer warned that achieving these goals in a challenging fiscal environment would require close collaboration between national, regional, and local governments, businesses, academia, and the third sector. “Successful delivery will hinge on a level of close collaboration and innovation between these groups that has historically rarely been seen,” Sizer said.
