Cities report reveals mixed picture of economic recovery - The Guardian

Alexandra Jones of Centre for Cities said the report showed that places such as Leeds (above), were "best placed to lead the UK's recovery". Photograph: David Levene

A mixed picture of economic recovery across the UK is revealed today, as a new report highlights the cities that have proved most – and least – resilient to the recession, and shows that some areas hit hard by job losses are bouncing back.

The Centre for Cities annual index, Cities Outlook 2011, published today, names the cities that are particularly resilient as Milton Keynes, Reading, Aberdeen, Leeds and Bristol.

But it also identifies five vulnerable cities that may not feel the full benefits of national economic recovery for some time: Sunderland, Liverpool, Birkenhead, Swansea and Newport.

These conurbations will be more affected by government spending cuts, because of low skill levels and low levels of business activity, with more people employed in the public sector and more claiming unemployment benefits. These cities will need additional financial support from central government, the report concludes.

Claire Maugham, Centre for Cities' deputy chief executive, said it was not a surprise to see some of the cities in the top five. "Cities like Liverpool have one in five of the population with no formal qualifications. Whereas in Milton Keynes, one in three people have degrees, which is a spur to investment and people moving there."

The spending cuts could reinforce regional differences, as 70% of those due to face the biggest welfare cuts by 2014/15 are in the north-west of England.

Among those cities that have shown strong recovery, Hull, Doncaster and Northampton saw the biggest reductions in unemployment between March 2010 and November 2010. They all saw drops of 1.2 percentage points in the rate of people claiming jobseeker's allowance, more than twice the UK average.

Alexandra Jones, chief executive of the Centre for Cities, said: "Buoyant cities like Leeds and Bristol, which have been fast-growing and have lots of private-sector jobs, are best placed to lead the UK's recovery. It's time these places had new financial freedoms such as full control over the local business rate, and new powers to raise money. They could also benefit from having London-style mayors.

"During 2011, the UK cities most dependent on the public sector, and which have seen slower economic growth over the last decade, will find it more difficult to rebalance towards the private sector. These cities will need realistic plans of action to ride out the spending cuts and create jobs – but they will also need additional financial support from central government."

The economic success of Leeds may come as a surprise, Maugham said. "It is in a region that has pockets of deprivation, such as Barnsley and Doncaster, and Leeds has largely been overshadowed by Manchester, which has done a better job of promoting itself. But Leeds is better placed in terms of creating private sector jobs in the future."

Leeds city council said that the report "makes for encouraging reading". A spokesman said businesses had worked hard to make the city a success.

Bristol city council's leader, Barbara Janke, said: "This report's strong support for Bristol's competitiveness is particularly welcome news at the moment, when many people across the city are facing tough times.

"This report shows that despite the current economic and financial challenges, Bristol is well placed to help drive the region's economy."

Referring to Birkenhead's low ranking, Wirral councillor Andrew Hodson, the cabinet member for regeneration and planning strategy, said: "We are working hard to support businesses in Wirral and to attract more private-sector investment into areas like Birkenhead so that we can rebalance our economy and be less dependent on public-sector jobs."

He pointed out that in the past 18 months more than 300 jobs for young people had been created, at a time when youth unemployment is at an all-time high.

"We will continue to do all we can to support our existing businesses whilst also attracting new investment through our developing links with China," he added. Hodson said the Wirral Waters development would create more than 20,000 jobs in the heart of its most deprived community.

The TUC general secretary, Brendan Barber, said: "This report paints a mixed picture of how the UK is emerging from recession. It's great to see areas bouncing back but many towns and cities, particularly in the north, are failing to see any sort of recovery.

"Government can play a key role in encouraging growth, but all we've seen so far are cuts focused on the poorest local areas. A meaningful growth strategy from this government is long overdue."