A new report published by Insight East shows that the East of England region compares favourably alongside global economic powerhouses such as Massachusetts/Rhode Island, Virginia and California in the United States, and Tokai in Japan. The report is the culmination of a study looking at 23 different measures of competitiveness aimed at providing a better understand of the international strengths and weaknesses of the region’s economy.
The findings show that the East of England has been economically successful, with historically high levels of economic growth and participation in employment. The region is a global leader in innovation and R&D investment and benefits from good international transport connections. However, there are challenges ahead that need tackling if the East of England is to remain a player on the world-stage in the future. The implications of not doing so would be significant not only for the economy of the East of England, but also for the UK economy as a whole, as the East of England is one of only three regions that generates wealth for the national economy.
Prior to the recession, if the East of England was an OECD nation (countries that are part of the Organisation of Economic Co-operation and Development), it would have ranked 18th out of the 39 OECD member and partner countries in terms of GDP per capita in 2005. The region also performed above OECD and EU averages for its rate of economic growth (2.9 per cent per year between 1995 and 2005) and the proportion of adults in employment (60.7 per cent in 2007).
With exports worth £20.2 billion in 2006, the region had the fourth highest value of exports in the UK. Inward investment also continues to be of considerable importance to the East of England, with the UK remaining a leading location for foreign direct investment and headquarter operations.
A world-leading R&D region
Total investment in research and development (R&D) is equivalent to 3.9 per cent of the value of economic output – which is double the EU average (1.8 per cent), placing the region in a leading global position. This analysis reinforces the findings from Insight East’s Innovation Insight Report (March 2009) which revealed that the East of England was the top performer amongst UK regions for 9 measures of innovation performance.
An effective knowledge-based economy
43 per cent of the East of England’s employment is in knowledge-intensive services, ranking the region 15th among 97 EU NUTS1 regions, and well above the EU average of 32.9 per cent. The two European comparator regions with the highest proportion of employment in knowledge intensive services are currently the South East of England (45.1 per cent) and South Sweden (45.1 per cent). Typically, the leading US comparator regions perform more strongly than European regions on this measure, including Massachusetts/Rhode Island (49.3 per cent) and Virginia (46.5 per cent).
A fast-growing region
The East of England is growing rapidly. Between 1995 and 2005, the population of the region grew by nearly 6 per cent, 19th highest among 97 EU NUTS1 regions. Recent demographic growth in the East of England has been the highest recorded by any UK region outside of London.
Labour productivity in the East of England is relatively low
A number of US regions continue to lead in economic performance and productivity. For example, in 2005 Massachusetts/Rhode Island and Virginia had an economic output per worker of €85,199 and €82,917 respectively, which is greater than the nearest European regional economic output per worker of €73,357 found in South Netherlands. With an economic output per worker of €49,415 in 2005, the East of England is ranked 49th out of 97 EU regions.
Constraints - skills and infrastructure
With 20.3 per cent of adults with higher level qualifications (degree and higher degree level or equivalent) in 2007 the East of England ranked below several leading global regions as well as below the UK average. Only 74 per cent of the region’s 17 year olds participate in post–compulsory education, well below the EU average of 88 per cent. If the East of England is to continue to perform strongly against other comparative world-leading regions, this issue needs to be addressed. This is especially important if the East of England is to remain a key knowledge-based economy and capitalise on a rapid transition to a low-carbon economy.
The region has good international connections, with relatively good access to a range of European and global destinations through its gateway airports and ports. In 2006, the airports and ports of the East of England handled some 35 million passengers – representing over six times the regional population and positioning the region 20th out of 97 EU NUTS1 regions for total air passengers.
However, the East of England has a regional accessibility value (ease of reaching a major economic centre) of 59 minutes. This is considerably higher than the UK average of 44 minutes, indicating a relatively low accessibility score. The East of England’s accessibility score is the fourth lowest among global comparator regions as well as the fourth lowest in the UK.
Contact insighteast@eeda.org.uk