Does the Manchester Model deliver?

Note that this is not because these regions are necessarily the best on any single measure, but because they are consistently near the top across all five measures for ITL1, and three measures for ITL2.3

If we consider GDP growth between these two average periods, out of all the ITL1 regions Greater Manchester exhibits the highest growth rate (at just over 20%); this is also true at the more aggregate level, the North West experiences the highest growth rate (17%). Interestingly, if we compare this to the preceding eight-year period (2008-2015) Greater Manchester was ranked 21^st out of 46 ITL 2 regions, and 9^th out of the 12 ITL1 regions. This therefore provides evidence of higher growth over the last eight years compared to other UK regions. Of course, the higher growth could simply be because the population expanded and is not per se an indicator of better performance. For this, better measures are GDP per head or labour productivity. With regard to GDP per head, Greater Manchester had the second highest growth rate, and for labour productivity, the 7^th highest. If we consider the North West, its growth of GDP per head was the 2^nd highest and labour productivity was the 3^rd highest from 2020-2023 compared to 2016-2019.

The role of trade in economic activity

To understand the importance of trade in economic activity, we compare the change in average exports over the period 2020-2022 to the period 2017-2019.4

In Figures 3a-d, we give the change in total exports of goods and services. Only four of the 12 ITL1 regions saw exports increase over this period (probably something to do with Brexit). Out of the four ITL1 regions that did see an increase in exports, the top performing ITL1 region was London (23%), and the second was the North West (16.4%). The decline in exports in some regions was marked for some regions – notably the North East, the South East, West Midlands and Scotland.

While the increase in exports for London appears to be entirely driven by an increase in exports by services firms (71%), for the North West it was driven by a combination of manufacturing firms (21% increase) and services firms (24%). Tellingly, when considering manufacturing firms, the North West had the highest growth of exports out of all the ITL1 regions. Looking at services exports, we see that nine of the thirteen regions saw service exports rise, and the rise in the North West was the fourth highest (behind Yorkshire, East England, and West Midlands). The import statistics also reveal that the North West saw the second biggest increase in imports of services.

Firms increasingly use imported services as an input into manufacturing and thus as input into their exports. This is known as “servicification”. We have, therefore, also calculated, using data at the firm level, the share of imported services relative to exports of goods for each firm in each ITL1 region. In terms of the level of servicification (blue bars), the North West is only slightly above average. The unweighted average across all regions, excluding London, is 40%, and for the Northwest it is 70%. However, for changes over time (the sample has been split in two temporally and we have compared the average over the last 6 years with the average over the first six years for each region), we see that the change in servicification (red bars) is the greatest for the North West.

What are the key takeaways from the data?

• Greater Manchester and the Northwest have performed very well over the recent past. However, it is important to note that we do not know why, and we cannot attribute this to the mayoralty of Andy Burnham. It is of course possible that policies introduced in Manchester did help drive the performance, but it is equally possible that the region would have done even better without those policies. This is an empirical question requiring more research.
• In comparing regions, we have measured relative growth 2020–23 vs 2016–19 over time. The growth rates mask differences in absolute prosperity levels. Hence, for example, London remains richer per head than other regions, despite ranking poorly on growth.
• The ‘success’ of Manchester / the North West region is also reflected in a strong trade performance of the region and the growth in servicification. However, we cannot attribute causality; higher growth rates may have led to more trade, or conversely more trade may have led to higher growth rates. Once again, this is an empirical question which needs more research.
• The figures demonstrate that there is considerable variation in economic performance across the regions of the UK. This is inevitable. As the economy evolves over time, there will be regional ‘winners and losers’, and indeed economic growth depends on such adjustment and flexibility. While the desire to ensure economic growth in every postcode of the UK has political resonance, from an economic perspective it is perhaps better to acknowledge this may not be possible to achieve, and where there may be losers, to consider the role of mitigating policies.

Additional Charts for each of the measures