Britain has world-class centres of excellence, including London and the great University Cities, which are pivotal to our national economy. These drive high levels of inward investment and job creation and, due to network effects, the agglomeration of talent and resources. However, the pressure of success brings its own challenges and these ‘top tier’ locations require high levels of investment to sustain themselves. The positive agglomeration effect of business location cannot be sustained unless fundamental quality of life issues around infrastructure and housing capacity are addressed.
Challenger Economies like the Northern Powerhouse and West Midlands do not face the same pressures on housing and infrastructure. They benefit from a more balanced housing market, healthy business environment with a sustainable pace of growth, and often a better quality of life. For cities like Manchester and Birmingham, a lack of skills is the biggest barriers preventing them from moving further up the rankings. In these areas, the agglomeration effect of industries such as manufacturing and automotive has created a thriving environment for investment, but skills shortages will need urgent address through training and education if these cities are to remain attractive to investors.
These cities need to consider different levers for attracting investment. Without the world-class status of London, Oxford or Cambridge or the agglomeration effects of Manchester and Birmingham, they must build on different strengths and opportunities, including lower housing costs, readier access to schools and hospitals, thanks to lower population numbers, and a better quality of life. In some cases, raising city profile and brand presents a further opportunity to increase investment potential. Recognition can come from regeneration, innovation, sporting success or even the idea that a city is a great place to live. Short term measures to increase momentum in this respect can help city leaders make an immediate impact and attract further employment and inward migration.
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