The last two decades have seen striking physical transformations in London.
Tom Forth wrote recently that much of the £120 billion invested in transport infrastructure in recent years runs either through Kings Cross – St Pancras or within a mile of the two stations – coupled with major public investment in world-leading institutions of research and knowledge. John Burn-Murdoch, from the Financial Times, has calculated that, without London, the UK would be poorer than Mississippi, thereby emphasising the significance of London to the country overall, but equally there is untapped potential elsewhere.
However, the conditions that gave rise to the shiny new infrastructure now seen in London has not always been evident. Following a period of post-war decline, London underwent an ‘economic renaissance’, from 1991 onwards, driven by a huge expansion of high-value financial and knowledge business services. Between 2009 and 2014, London’s economy grew by 29 per cent, whilst many other UK cities and regions were managing the uneven consequences and impacts of the Global Financial Crisis, in tandem with renewed efforts to regenerate, reinvent, and build sustainable urban economies and communities. Although, nationally, there was an expansion in jobs after 2010, growth was varied, with London and other southern cities outpacing those in the north. However, since 2019, the economy has been growing faster in some of the UK’s biggest cities outside London.
London calling
Alongside increased transport investment in London, public sector R&D has been highly concentrated, with over 50 percent of public funding going to London and the Greater South East. Yorkshire receives under 6 per cent of public R&D funding. Elsewhere, 24 per cent of R&D funding awarded by the Advanced Research and Innovation Agency (ARIA), in 2025-26, has been allocated to London, and a further 36.6 per cent to the South East and East of England.
But, despite being the UK’s richest city, one in seven Londoners is in persistent poverty, and a third of children live in poverty. Like other places, London has experienced the financial challenges facing the public sector, with demand for local government services outstripping resources. In 2024, Andy Pike and Jack Shaw wrote how, with local authorities facing a projected £9.3 billion deficit by 2026-27, it was London councils that were expected to have the largest shortfalls.
From the vantage point of the north, there has been envy at the scale of transport investment in London, alongside Transport for London’s ability and capacity to operate a fully integrated transport system. Furthermore, the bespoke mix of funding and financing arrangements assembled by national, regional and local government, and the private sector, to build Crossrail and other major transport schemes in London have been coveted by many northern leaders seeking the opportunity to develop similar investment mechanisms.
Economic Mais-laise
Regional growth was one of three priorities set out by Rachel Reeves in her Mais Lecture. Alongside details of new investment in the north of England, aligned to key industrial strengths, a landmark reference in the Reeves speech was the commitment by the Government to produce a roadmap for fiscal devolution, which could see England’s mayors receive a share of national tax revenues.
Policymakers have long been encouraged to use regional policy to assimilate the assets and latent and untapped potential of cities and regions outside London into national competitiveness missions. Here, the Chancellor gave clear support to research and innovation collaborations within and between regions, and the connections between transport, research and innovation, housing, and business growth and development. The value of inter and intra-regional networks was also highlighted by the House of Commons Science and Technology Select Committee, reporting on its inquiry into ‘Innovation, Growth and the Regions’.
Tellingly, new inter-regional collaborations, such as Cambridge and Manchester, and Liverpool and Oxford, have been established. Recognising this, the Science and Technology Committee has called on the Government to incentivise complementarities between institutions based in London, Oxford and Cambridge, and those in other regions.
Leeds is the UK’s second largest financial hub, and the city’s Northern Square Mile has been branded as ‘London’s funky sibling’. Leeds has over 100 fin-tech businesses, and it hosts offices of the Bank of England, the National Wealth Fund and the Financial Conduct Authority. The symbiotic relationship between Yorkshire and London, is becoming increasingly visible. As part of a new innovation plan, the West Yorkshire Combined Authority is planning a new strategic relationship with London – based on taking forward shared priorities around financial services, and knowledge exchange linked to the Elizabeth Line (Crossrail) and West Yorkshire Mass Transit development.
Devolve you forget about me
London is the centre of UK Government policymaking, but increased devolution, and the decentralisation of a growing number of Whitehall functions, are creating new opportunities to build stronger inter-dependent connections between London and the regions. Under the Places for Growth Programme, Civil Service Hubs, such as the Sheffield Policy Campus and the Darlington Economic Campus, are increasingly formulating and shaping national policy, and working even more closely with universities in the regions.
At the same time as cities and regions are forming strategic alliances, regional university groups are themselves realising the mutual benefits from stronger inter-regional collaborations. Yorkshire Universities and London Higher have previously made the case for the value of higher education institutions work together regionally. A broader coalition, encompassing seventeen partnerships, including, amongst others, Yorkshire Universities, London Higher, Midlands Innovation, Universities for North East England, Universities Scotland, Universities Wales, the N8 Research Partnership, and the Oxford-Cambridge ARC Universities Group, has now started to meet regularly. This network provides distinct insights and value to the HE sector’s knowledge and understanding of place, and how collaboration between universities, and with public and private partners in regions and localities, works in practice.
Pitting London against other regions is a zero-sum game. A more effective strategy is to recognise, build upon, and invest in, strengths, assets, and potential in all regions, and incentivise and encourage innovation and collaboration. This approach, rather than pitching overt competition, is a better recipe for creating long-term success in London and the other regions and nations in the UK.
This blog is published as part of the Commission on research for better economic growth
