The United Kingdom saw an unclear picture of UK prosperity, as uneven rates of prosperity growth for the last year were reported in the third edition of the annual UK Prosperity Map, from Barclays Wealth & Investments.
Against a backdrop of relativeLY volatile economic conditions and Brexit negotiations, the 2017 data map shows that, while most areas of the country are more prosperous overall than they were last year – in many cases cities are outpacing their wider region; there are clear disparities opening up when it comes to GDP per capita and earnings, Barclays says.
Dena Brumpton, chief executive of wealth & investments at Barclays, says: “The last twelve months have seen fluctuations in the UK economy, and this is reflected in the mixed picture of prosperity growth across the country in this year’s UKProsperity Map.”
Barclays’ research uses factors including: the numbers of millionaires, average earnings, business growth rates, house prices and GDP per capita, to generate a ‘Prosperity Index Score’ for each UK region and city.
London outpaced by cities in the North and Midlands
The data shows that, while London continues to dominate as the UK’s most prosperous city, other cities also saw positive trends over the last year. Newcastle and Birmingham saw the biggest year-on-year increases in GDP per capita, at 4.4 pct and 4.2 pct respectively. This indicated growth well in excess of the overall UK figure over the same period of 1.8 pct.
Looking at house prices, almost every city has seen higher house price growth than London (up 3 pct), according to the data, with Birmingham at 8 pct and Manchester at 7 pct – two of the biggest increases.
Birmingham is also “booming”, when it comes to start-up businesses, says Barclays. The city saw the highest business birth-to-death ratio of any in the UK, with 1.81 businesses being created for every closure; this trumped London, which reported 1.78.
However, at a regional level London does comes out top – but the West Midlands as a whole also ranks highly, with a business birth-to-death ratio of 1.55; possibly indicative of a ‘ripple effect’ from Birmingham at the region’s economic heart, Barclays says.
Newcastle saw the greatest increase in average earnings of any UK city, up 6.3 pct – however, this isn’t reflected in the wider North East region, which actually saw a 0.3 pct decrease in earnings. This, Barclays argues, points to the city as an island of growth in a region facing economic challenges.
And Brumpton says: “It’s encouraging to see that people across the country are benefiting from higher earnings and the momentum created by greater GDP per capita.
She adds: “The continued economic growth of the UK’s cities is further cause for optimism – but if the current trend of high prosperity growth in cities continues, regions risk being left behind by their flourishing centres. The challenge for businesses and policymakers is to find new ways of bridging this gap and ensuring greater balance in how each part of the UK is sharing in the country’s prosperity.
“We are continuing to work closely with our clients to help them boost their own prosperity, whether that is through investments, savings or planning for retirement.”
One in seventy-nine Britons is a millionaire
The number of wealthy individuals continues to increase, Barclays Wealth & Investment says. According to its data, the UK’s millionaire population grew by 7.6 pct year-on-year in 2016. It says every region has seen an increase in its number of millionaires since last year’s research except Scotland, which saw no change.
Looking at historic data, Barclays adds, that the East Midlands and South West saw the highest percentage growth in their millionaire population between 2015 and 2016 (11.1 pct and 10.5 pct respectively).
Principal Economist at Centre for Cities, Paul Swinney, says regarding the research: “This research illustrates the need for the Government’s forthcoming industrial strategy to address the barriers that currently prevent over parts of the country generating prosperity for their residents that is seen in the south-eastern corner of England.”
Average earnings and GDP per capita increase, supporting prosperity across the UK
Despite uncertainty in the wider economic and political landscape over the last year, several macroeconomic indicators have seen widespread positive growth: GDP per capita increased in every region and city of the UK, with the North West seeing the biggest increase at a regional level (3 pct), Barclays says. It adds that average earnings are up in every region except the North East – which saw a small decline – with the West Midlands seeing the greatest rise at 3.9 pct.
Unemployment decreased in every region except Northern Ireland and the South West, according to Barclays’UKProsperity Map.
Consumers are saving and spending – rather than investing
A survey conducted alongside the UK Prosperity Map research, shows that the average personal disposable income of UK adults is £281.00 per month, after paying for essentials such as food, household bills and housing costs. When asked what they do with this money – other than spend on leisure activities – 46pct say they are most likely to put their money into a savings account: 21 pct spend on necessary purchases, 21 pct spend on something they want but don’t necessarily need, and 15 pct spend on home improvements.
Significantly, just 12 pct invest this money into an ISA or pension, according to Barclays.