Contrary to reports of a rise in rural living, new research from CAGE shows the COVID pandemic has done little to change the economic geography of the UK. But the preference for urban living revealed in the report offers an opportunity for the government to tackle regional inequality.

In a new report launched today [18 November], the CAGE Research Centre has studied the impact of the pandemic on the UK’s regional structure.

The research combines data from the Land Registry, the UK Census, ONS income estimates and the Annual Survey of Hours and Wages to understand where people are choosing to live and work.

Key findings are:

• People like living in cities: There is little evidence that large numbers of people are moving out of urban locations to rural areas. A small boom in the purchase of rural properties in August 2020 was led by a small number of mainly wealthy purchasers.
• London remains by far the most popular area to live and work: This is despite a squeeze on disposable incomes. Over the last ten years house prices have been rising in relation to the rest of the UK, while London wages have remained stagnant. House transactions, meanwhile, have stayed steady.
• The squeeze on Londoners’ disposable incomes is big: In 2012, Londoners’ disposable incomes were around 20% higher than the rest of the country. By 2018 this advantage had been cut by one-fifth.

The findings show that the pandemic has done little to change the economic geography of the UK. London is still by far the most dominant force in the UK economy. But the desire for urban living revealed in the data, and the increasing squeeze on Londoners’ disposable incomes, reveals an opportunity to tackle regional inequality.

Director of CAGE and co-author of the research, Professor Mirko Draca, explains, ‘Though London remains the main attraction, our data shows that across the UK, people like living in cities. If the government is serious about challenging the economic power of London and boosting the regions, it needs to put cities at the centre of its agenda.’

At the launch event today [18 November], Professor Draca will join Rebecca Riley from the West Midlands Combined Authority and Paul Swinney from the Centre for Cities to discuss the role cities might play in tackling regional inequality. They will debate how the regions can challenge the dominance of London, whether it is better to invest in towns or cities and whether more regional independence could help.

Professor Draca said, ‘There’s a real danger that the government is spreading its bets too thinly. Its current plans to invest in many different towns to break the economic dominance of London is like setting up acoustic tents to draw crowds away from the main stage at Glastonbury. The government needs to place bigger bets on fewer places. Investing in cities that can rival London is the best way to tackle regional inequality for the long-term.

ENDS

NOTES FOR EDITORS

The research forms part of a new CAGE policy report:

Draca, M., Nathan, M. and Villa Llera, C. (2021). ‘Cities still matter: The impact of COVID-19 on regional structure’, in Draca, M. (ed). Economic Challenges and Success in the Post-COVID Era. CAGE Research Centre, pp.50­–63.

The research will be launched at this event:

Cities still matter: The role of urban centres in tackling regional inequality

18 November 2021, 12.30pm-1.30pm (Live-streamed to the CAGE YouTube Channel)

Chair: Gemma Tetlow, Chief Economist, Institute for Government

Panellists: Mirko Draca, Director, CAGE Research Centre

Rebecca Riley, Head of Research and Office for Data Analytics, West Midlands Combined Authority

Paul Swinney, Director of Policy and Research, Centre for Cities

About CAGE

CAGE is a research centre based in the Department of Economics at the University of Warwick. We conduct independent policy-driven research informed by history, culture and behaviour. Our aim is to move beyond traditional measures of economic success to consider broader influences on global prosperity: from cultural and behavioural attitudes to voter preferences and political institutions. We analyse historical and contemporary data to draw out lessons for modern policy. CAGE is supported by the Economic and Social Research Council (ESRC).

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