Annual trends
in the index
A year-on-year comparison with 2023’s findings
All cities experienced a year-on-year drop in their index scores between 2023 and 2024 – except one location in the Midlands.
The decline – affecting the 49 other cities – is primarily due to widespread falls in the growth potential pillar, specifically in the GVA forecast indicator. This trend reflects the current economic conditions within the UK.
Although inflationary pressures have eased significantly over the past twelve months, price levels remain elevated. Additionally, tighter monetary conditions (in part due to the Bank of England’s policy tightening campaign) have weighed down on economic activity, leading to a systemic slowdown in growth prospects across the UK.
Interestingly, scores in the local skills and infrastructure pillars have increased significantly across the board, reflecting investments into internet connectivity, local skills and education. For instance, towards the bottom of the rankings, Rotherham’s local skills score has increased from 8.1 to 10.8, while its local infrastructure score has increased from 19.5 to 29.7. At the top of the rankings, Inner London’s local skills score has increased from 96.9 to 114.7 and its local infrastructure score has increased from 59.2 to 66.3.
This is important to note as these will bring long-term benefits to the UK and its cities while GVA fluctuates, forcing the growth potential score to increase or decrease year after year.
Early priorities for new government
Economic growth is the main priority for the newly elected Labour party. Rachel Reeves, in her first speech as Chancellor, said that the government would be taking immediate action to fix the economy.
“We have promised a new approach to growth – one fit for a changed world. That approach will rest on three pillars – stability, investment and reform.”
Rachel Reeves, Chancellor of the Exchequer
North-south divide widens
The north-south divide in the UK refers to social, economic, and cultural disparities between London & the South East and the rest of the UK.
People living in the South East typically enjoy a longer life expectancy, higher income, and a better standard of living than those in the North. Businesses often choose to set up in the South, creating a wealth divide. Residents in the North experience lower incomes, higher unemployment, and a lower standard of living compared to their southern counterparts. Strategies to address these differences include devolution measures, encouraging professional jobs in the North, and relocating businesses and organizations.
In 2023, seven of the top ten best locations to invest in on our report were in the South. This has fallen by one in 2024.
But the locations at the bottom of the rankings are overwhelming locations outside the South East.
In both 2023’s findings and this year’s, the bottom 18 places (36% of all locations in the report) in the rankings were taken by places outside London & the South East.
EY’s investor sentiment survey further reveals that over half of potential investors into the UK would favour investing in the capital, threatening to widen the divide when it comes to FDI.
Getting the economy moving for the benefit of the whole UK has been a key message coming out of the new government’s early communications. In her speech, the Chancellor outlined plans, including the building of 1.5 million new homes and embracing renewable energy through onshore windfarm construction.
“My Government believes that greater devolution of decision making is at the heart of a modern dynamic economy and is a key driver of economic growth and my Ministers will introduce an English Devolution Bill [English Devolution Bill]. Legislation will be introduced to give new powers to metro mayors and combined authorities. This will support local growth plans that bring economic benefit to communities.”
The King’s Speech, July 2024
The new Deputy Prime Minister, Angela Rayner, has also vowed to work with the UK’s mayoral combined authorities (CAs), covering areas like Greater Manchester, Liverpool, South Yorkshire, West Yorkshire, Tees Valley and the West Midlands, to greater harness their devolved powers and resources.
Bucking the trend
Coventry's significant 18-place jump in our index is primarily attributed to its strong performance in the growth potential pillar. It was the only location to not experience a year-on-year decline in absolute points for this pillar.
This resilience was driven by a relatively smaller decline in the GVA forecast indicator compared to other cities. Additionally, Coventry saw a robust increase in the number of new businesses opened relative to its population.
The city also improved across indicators in the other two pillars, particularly in online connectivity and public transport usage. Coventry ranks 12th in the number of universities and has seen an 18.7 point improvement in the qualification level indicator, crucial for its young and growing population.
“Coventry University is a key partner in a once-in-a-generation opportunity to build presence within the UK’s most comprehensive battery and EV ecosystem – Coventry and Warwick Gigapark investment zone – a pioneering centre of excellence for battery technology development and manufacturing which will power Coventry and the UK’s electrified future.
“The Gigapark – built over 241.4 hectares of land, of which 182.7 hectares will be available for tax incentives – will be close to a critical mass of academic R&D, automotive supply chains, and a skilled workforce, including the £130m UK Battery Industrialisation Centre, Coventry University, and the University of Warwick.
“The development is anticipated to attract up to £2.5bn inward investment, and create up to 6,000 new highly skilled jobs directly and thousands more in the wider supply chain in Coventry and the surrounding region.”
Jo Dobson, Pro-Vice-Chancellor (Policy and Engagement), Coventry University
Despite a fall in their overall year-on-year scores, the northern locations of Stockport, Bradford, Doncaster and Kirklees demonstrated progress and improved their rankings.
Stockport jumped eight places in the 2024 Investment Attractiveness Index, rising to 25th. This rise is largely due to its improved performance in the local infrastructure pillar (+14.9 points). Significant enhancements in its online connectivity saw a year-on-year improvement of 45.0 points.
Bradford and Doncaster share commonalities in their rise in rank, mainly due to their relatively better performance across all three pillars. In the growth potential pillar, both cities saw a relatively muted year-on-year fall in their scores compared to other cities. Both also saw strong improvements in the online connectivity indicator, boosting their local Infrastructure pillar scores.
Falling down the rankings
In contrast, the regions experiencing the largest declines in rankings are Wolverhampton, Reading, Milton Keynes, Portsmouth, and Leicester.
A key commonality among these cities is that, while all five saw year-on-year score improvements in the local skills and local infrastructure pillars, these gains were more than offset by substantial falls in the growth potential pillar. These cities ranked among the top 10 fallers within the growth potential pillar.