As the economic recovery filters down from the capital to the rest of the UK, companies and individuals are seeing the benefits of moving to other regions, reshaping the nation’s future wealth distribution.
Regions across the UK are benefiting from investment by businesses keen to relocate or start up outside of London, and individuals are cashing in on their property wealth and moving out of the capital into comparatively cheaper areas.
In Yorkshire, the population grew by 18 per cent between 2008 and 2009 alone and in West Yorkshire specifically, the overall number of new migrant workers arriving in 2013 was 16,700; an increase of around 3000 from the previous year. Leading law firm, Ward Hadaway, recently noted that it was seeing increasing numbers of business across all sectors looking for opportunities to set up shop in Yorkshire due to the availability of modern, hi-tech facilities in the region and its central location.
In addition to the businesses that are pumping money into regions outside of the capital; individuals are also doing this by migrating from London to other major cities in the UK. In fact, urban prime markets outside of the capital have seen a ten-year house price increase of 51 per cent and last year the average property in Yorkshire sold for £152,1634.
Confidence in the market is also beginning to return and clients are once again starting to invest in their businesses, as well as new projects put on the back burner with the recession.
The result is increased corporate finance, mergers and acquisitions, and a more normal pattern of wealth generation not only in Yorkshire but across the country as a whole.
Although London remains the powerhouse to the UK, increased political will means regional business hubs look set to benefit from enterprise investment and increased regional growth.
In 2014, Chancellor George Osborne announced plans for massive investments in the north in order to help boost the economy there and create an attractive alternative to the more-costly south. Additionally, earlier this year, the Prime Minister and Chancellor set out their six-point long term economic plan for Yorkshire and Northern Lincolnshire which aims to increase the size of the local economy by an extra £13bn in real terms by 20305.
In 2006, we conducted a study into patterns of wealth generation across the UK and found that wealth was being boosted by new enterprise and luxury brands.
Almost a decade on and with the economy in a better position now than at any point in the last six years, it is clear that small regional businesses are driving real economic and employment growth through creating jobs and increasing wages.
New government infrastructure initiatives such as the High Speed 2 rail link are also helping with this post-recession redistribution of wealth, as they are bringing together local enterprise partnerships and local authorities.
The Chancellor hopes to deliver at least £6.4bn of investment in transport in Yorkshire and Northern Lincolnshire as part of the plan for the region. However, in order to maximise growth opportunities and bring together the main economic stimulators, the government needs to ensure that it takes a coordinated approach in the major urban areas outside of London.
While it remains to be seen how long it will take before the country´s economy has fully recovered to pre-crisis levels, it is evident that a regional recovery is happening and that a rebalancing of wealth is occurring between London and the rest of the UK.
If you look at the sectors showing the greatest increases in confidence, they are those which are often highlighted as the frontrunners of recovery – construction, business services and IT.
In Yorkshire, core strengths lie within IT and the life sciences which is why as part of the Chancellor´s economic plan for the region, major new investments in scientific excellence are being made.
*Eric Barnett started his banking career in 1983 at NatWest as a graduate trainee. In 1986 he joined Hambros Bank and undertook a variety of roles. He became Societe Generale Private Banking Hambros CEO in 2007.