How London boroughs will rival the ‘Northern Powerhouse’

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The Chancellor, George Osborne, is very proud of his concept of the northern powerhouse. He first coined the phrase in Manchester last year and couldn’t help a smile as the Queen used the term in the state opening of parliament this week.

The idea is to build the economy of the cities in the North of England to rival London and the South East. There’s even a government minister for the northern powerhouse. But a look at the economic data shows the scale of the task and underlines the strength of London.

The Office for National Statistics uses GVA (Gross Value Added) to measure the contribution to the economy of each individual producer, sector or area in the UK. Using the latest data for 2013 Urbs compared the North West region of England, which includes Greater Manchester, Merseyside, Lancashire, Cheshire and Cumbria with the area classified as Inner London West, which includes the City of London and 5 boroughs – Westminster, Camden, Kensington and Chelsea, Hammersmith and Fulham, and Wandsworth.

North West of England Inner London West
Population 7.1 million 1.1 million
Total GVA £142 billion £151 billion
GVA per head £20,000 £136,000

The figures for Inner London West are inflated by the financial service activity of the City, but demonstrate its economic contribution. The per capita calculation may be unfair as many of the people involved in generating the output of the area in London may live elsewhere.

However, the figures for Inner London East – the 8 boroughs of Hackney, Newham, Tower Hamlets, Islington, Haringey, Lewisham, Southwark and Lambeth – are instructive. These boroughs represent some of the capital’s more deprived areas. The GVA for this area is £87 billion, which translates as £39,000 per head, nearly double that of the North West of England.

Developing a so-called northern powerhouse to redress the North/South divide is widely seen as a good ambition but the hard numbers show that London is likely to remain the real powerhouse of the UK economy.

Source data

See also:

NY beats London in economic power