What is driving the recent growth of large cities? – Centre for Cities

Report on Urban Economic Growth and its Alignment with Sustainable Development Goals

Executive Summary

An analysis of recent economic data reveals a significant trend in the United Kingdom’s urban landscape. Since 2019, large cities outside of London have demonstrated sustained economic growth, decoupling from the national trend of slowdown observed in the capital and other regions. This growth is predominantly driven by knowledge-intensive industries, a development with profound implications for achieving several Sustainable Development Goals (SDGs). This report examines these trends, highlighting their connection to SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation, and Infrastructure), SDG 10 (Reduced Inequalities), and SDG 11 (Sustainable Cities and Communities). The findings underscore the potential for a national economic rebalancing, while also revealing emerging disparities among these urban centres that require tailored policy responses.

Analysis of Post-2019 Economic Trends in Large UK Cities

Divergence from National Growth Patterns and Contribution to SDG 10

Since 2019, the economies of large UK cities have grown faster than both London and the rest of the country. This marks a departure from previous trends, where growth was more uniform. While large cities maintained their pre-2019 Gross Value Added (GVA) growth rates, other areas, particularly London, experienced a significant slowdown. This shift represents a potential step towards achieving SDG 10 (Reduced Inequalities) by indicating a rebalancing of economic activity across the nation and reducing the long-standing economic dominance of the capital.

The Role of Knowledge-Intensive Industries in Fostering Sustainable Growth (SDG 8 & 9)

The sustained economic performance of these large cities is increasingly reliant on knowledge-intensive exporting services. This sector now accounts for half of all GVA growth in these urban areas post-2019. This development is critical for two primary reasons related to the SDGs:

1. High-Value Growth (SDG 8): Knowledge-intensive businesses are typically high-value-added, promoting the kind of productive and decent work central to SDG 8. Their expansion signals a positive momentum for creating sustainable and prosperous local economies.
2. Innovation and Infrastructure (SDG 9): Large cities provide the necessary ecosystem for these industries, including skilled workers, business networks, and advanced infrastructure. The growth of this sector is therefore intrinsically linked to SDG 9, which aims to build resilient infrastructure and foster innovation. For these cities to realise their full potential, the continued expansion of these industries is paramount.

Regional Disparities and Progress Towards Inclusive Urban Development

Uneven Growth Among Large Urban Centres

While the aggregate trend is positive, the growth is not uniform across all large cities, highlighting challenges in achieving equitable progress under SDG 10 and SDG 11. Analysis reveals significant divergence:

• Six of the nine large cities studied show higher growth in their knowledge industries than in their overall economy.
• A stark contrast exists between cities like Manchester, where the knowledge economy is growing nearly 20 times faster than in Liverpool, despite both cities having comparable overall economic growth.
• Cities such as Birmingham and Nottingham have seen rapid growth in their knowledge sectors, but this has been offset by declines in other industries, masking progress.
• Bristol has demonstrated strong overall economic and knowledge-industry growth, suggesting a healthy economy absorbing a growing labour force.

This increasing differentiation suggests that as cities begin to realise their unique potential, their economic trajectories will naturally diverge.

Policy Recommendations for Achieving Sustainable Development Goals

Strategic Interventions for Inclusive and Sustainable Economic Growth (SDG 8, 9, 10, 11)

To harness this nascent trend and ensure it aligns with the Sustainable Development Goals, the following policy actions are recommended:

• Sustain and Differentiate Support: The current growth trend is fragile and requires continued investment. As cities perform differently, support must be tailored to their specific needs and potential, ensuring that investment is targeted to foster inclusive growth and reduce intra-regional inequalities (SDG 10).
• Empower Local Governance through Devolution: The diverging needs of large cities necessitate localised policy responses. Central government should devolve greater strategic power, including skills, planning, and fiscal tools, to metro mayors. This aligns with SDG 11’s call for inclusive and sustainable urban planning and management.
• Exercise Caution with Data: The post-2019 data is new and subject to revision. Policymakers must proceed with an understanding that these trends require further confirmation over time before being established as long-term shifts.

By implementing these place-based strategies, policymakers can support the continued growth of large cities, ensuring it is sustainable, inclusive, and contributes effectively to the UK’s national and international development commitments.

Analysis of Sustainable Development Goals in the Article

1. SDGs Addressed or Connected to the Issues

   The article primarily addresses issues related to economic growth, regional disparities, and industrial innovation, which connect to several Sustainable Development Goals (SDGs).

   • SDG 8: Decent Work and Economic Growth

     The core of the article is an analysis of economic growth, measured by Gross Value Added (GVA), in large UK cities. It discusses productivity, the quality of growth (led by the knowledge economy), and the need to sustain this growth, all of which are central themes of SDG 8.

   • SDG 9: Industry, Innovation and Infrastructure

     The article highlights the shift towards a “knowledge-intensive” economy, emphasizing that growth in large cities “relies more on knowledge-intensive exporting services.” This focus on high-value, innovative industries and the mention of infrastructure as a key advantage for cities directly relates to SDG 9’s goal of building resilient infrastructure and fostering innovation.

   • SDG 10: Reduced Inequalities

     A key theme is the “productivity convergence between London and other large British cities” and the potential “rebalancing” of the national economy. By analyzing the faster growth in cities outside the capital, the article addresses the issue of reducing economic inequalities between different regions within a country, a key aspect of SDG 10.

   • SDG 11: Sustainable Cities and Communities

     The analysis is entirely focused on the economic performance of “large cities.” The policy recommendations, such as the need to “continue to support the large cities” and use “devolution as a tool to shape place-based policies,” are directly linked to strengthening urban economies and improving national and regional development planning, which are components of SDG 11.

2. Specific Targets Identified

   Based on the article’s content, several specific SDG targets can be identified:

   • SDG 8: Decent Work and Economic Growth

     • Target 8.1: Sustain per capita economic growth. The article’s entire analysis of GVA growth rates in large cities directly relates to this target of sustaining economic growth.
     • Target 8.2: Achieve higher levels of economic productivity through diversification and technological upgrading. The article’s focus on the growth of “knowledge-intensive businesses” which “tend to be high-value-added” is a clear example of achieving growth through a focus on high-value sectors. The mention of productivity, even when weak, also connects to this target.

   • SDG 9: Industry, Innovation and Infrastructure

     • Target 9.2: Promote inclusive and sustainable industrialization. The article discusses how the “knowledge economy” is growing significantly and accounts for “half of all GVA growth” in large cities, which aligns with raising the share of innovative, high-value industries in the economy.

   • SDG 10: Reduced Inequalities

     • Target 10.1: Progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average. While not mentioning income directly, the article’s focus on large cities outside London growing “faster than the rest of the country” is a proxy for reducing regional economic inequality, which is the spirit of this target.

   • SDG 11: Sustainable Cities and Communities

     • Target 11.a: Support positive economic links between urban, peri-urban and rural areas by strengthening national and regional development planning. The recommendation to “give more strategic power to metro mayors” for “place-based policies” is a direct call to strengthen regional development planning to manage and support the economic growth of cities.

3. Indicators Mentioned or Implied

   The article uses and implies several quantitative and qualitative indicators to measure progress towards the identified targets:

   • For SDG 8 (Economic Growth)

     • Gross Value Added (GVA) growth rates: This is the primary quantitative indicator used throughout the article and its figures to measure economic growth. For example, it states, “Large cities had similar GVA growth rates before and after 2019.” This directly measures progress towards Target 8.1.
     • Productivity growth: The article explicitly mentions “productivity convergence” and notes “weak growth in productivity” in cities like Bristol. This is a key indicator for Target 8.2.
     • Share of GVA growth from specific sectors: The article indicates that the knowledge-intensive sector “accounts for half of all GVA growth in these places,” serving as an indicator for economic diversification and upgrading towards high-value sectors (Target 8.2).

   • For SDG 10 (Reduced Inequalities)

     • Comparison of GVA growth rates between regions: The article’s central analysis compares the GVA growth of “large cities” with that of “London” and the “rest of the country.” This comparative growth rate is an implied indicator for measuring the “rebalancing” of the national economy and the reduction of regional inequality (Target 10.1).

   • For SDG 11 (Sustainable Cities)

     • Devolution of power: The recommendation to “give more strategic power to metro mayors, including skills, planning and fiscal tools” is a qualitative policy indicator. Its implementation can be tracked to measure progress towards strengthening regional development planning (Target 11.a).

4. Table of SDGs, Targets, and Indicators

   SDGs	Targets	Indicators Identified in the Article
   SDG 8: Decent Work and Economic Growth	8.1: Sustain per capita economic growth. 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation.	Gross Value Added (GVA) growth rates. Productivity growth rates. Share of GVA growth from knowledge-intensive industries.
   SDG 9: Industry, Innovation and Infrastructure	9.2: Promote inclusive and sustainable industrialization and raise industry’s share of GDP.	Growth rate of knowledge-based industries relative to the whole economy.
   SDG 10: Reduced Inequalities	10.1: Sustain income growth of the bottom 40% at a rate higher than the national average.	Comparison of GVA growth rates between large cities outside the capital and the national average/capital city.
   SDG 11: Sustainable Cities and Communities	11.a: Support positive economic links by strengthening national and regional development planning.	Implementation of devolution policies giving strategic and fiscal powers to local/mayoral authorities.

Source: centreforcities.org