Report analyses 45 cities according to output growth and job creation
Cambridge has overtaken Milton Keynes to become the fastest growing city economy in the UK, according to the latest study by law firm Irwin Mitchell.
The UK Powerhouse report, which is produced with the Centre for Economics and Business Research (Cebr), provides a quarterly estimate of GVA* and job creation within 45 UK cities 12 months ahead of the Government’s official figures.
The latest study is the 8th quarterly joint Irwin Mitchell / Cebr study and in addition to its ‘city tracker’, it examines the role of the financial services sector in boosting economic growth.
It says that Cambridge's skilled workforce and range of highly productive industries, including advanced engineering, design, and pharmaceuticals, contributed to a 2.9% year-on-year expansion in output in the 12 months to Q1 2017.
It adds that more patents are published in Cambridge than in any other city and 80% of the start-ups are still in business after three years.
UK Powerhouse currently forecasts that Cambridge will also have the fastest growing economy over the next 10 years.
Although Milton Keynes moved down to second place for GVA growth, it retained its number one position in the league table for job creation with York and Manchester in second and third place respectively.
The report praised Milton Keynes for its dynamic and productive knowledge-based industries. It also secured a top five ranking in the report's Financial Powerhouse employment league table, revealing that the city added 9,300 jobs in the banking, finance and insurance sector between 2013 and 2016.
Assessing the overall strength and importance of the financial services sector to the UK economy, the report revealed that the top 10 cities alone contributed a £2.1bn increase in GVA in the last three years and created 260,600 new jobs.
The report however said the loss of passporting rights, which allows virtually frictionless financial services exports across the European Economic Area, will undeniably affect the UK's financial industry, in particular in London.
The report concludes that although there is a degree of uncertainty regarding the full impact of Brexit negotiations upon London’s financial industry, a negative impact to some degree will be impossible to avoid.
Andrew Watson, Head of Business Legal Services at Irwin Mitchell's London office, said:
"In 2016, the financial and insurance services sector contributed over £124 billion in output to the national economy but it is facing some significant challenges, including the loss of passporting, which is almost certain to happen.
“The loss of freedom of movement upon leaving the single market could limit the availability of skilled European labour and significantly hamper the UK's financial sector, in particular the fintech sub sector.”
Jack Coy, Economist at Cebr, said:
“Despite the UK-level economic slowdown over the first quarter, it is good to see some bright sparks in local economies across the country. In particular, the best performing cities have benefitted from a combination of cutting-edge, productive industries and high-skilled workforces.
“Once again, this quarter’s City Tracker highlights the productivity of concentrated industry hubs and the power of urban agglomerations. These are typified by London’s fintech and digital start-ups, Cambridge’s high-tech Silicon Fen firms, and Sheffield’s growing advanced manufacturing cluster.”
* GVA – Gross value added (the value of goods and services produced)