London has retained the top spot in the European Regional Economic Growth Index (E-REGI) for the third year running and the 11th time since 2000.
Almost all cities in the UK have improved in this year’s ranking, with Manchester overtaking Edinburgh as the second-highest ranked city. The index, published yesterday by LaSalle Investment Management, the global real estate investment manager, confirms London’s prospects of medium- term economic growth as the best in Europe.
The index also shows that the UK capital continues to be the continent’s premier market for housing sought by would-be owner-occupiers, despite Brexit uncertainty.
The E-REGI Index assigns a score to each European region according to the level of human capital, wealth, medium-term economic growth prospects and the quality of the business environment, in relation to the European average.
Service sector employment
Almost all UK cities have improved in the ranking, with Manchester in 33rd place, Glasgow in 51st and Liverpool in 58th, each climbing more than 15 places compared to other European cities.
The rise in ranking is due mainly to the improved prospects for service sector employment. For instance, the predicted robust growth in professional activities, administrative and service support in Manchester has been instrumental in the city overtaking Edinburgh, in 34th place, as the second-highest ranked UK city.
Even though many UK cities narrowed the gap with the capital, London still improved its relative score and increased its lead over Paris, in second place. This was due mainly to a more confident outlook for service sector employment compared to last year.
However, the ranking is predicated on the assumption that the UK will leave the EU with a deal by March 2020 and remain in a customs union with the EU for an extended period. LaSalle acknowledges that a no-deal Brexit would adversely affect the rankings of the UK’s cities, with London the most vulnerable.
More important factors
Simon Marx, Director of Research and Strategy at LaSalle, has commented that although there have been numerous changes in the E-REGI Index over its 20-year history, London has always held a place near the top of the index. This is despite surviving many economic difficulties since 2000, such as the dotcom crash and the global financial crisis.
Marx added that the city has displayed a remarkable ability to bounce back during the last two decades, although the outcome of Brexit will obviously have a notable impact on London’s ranking. Nevertheless, he believes, the capital remains without equal in Europe in relation to the scale, flexibility and diversity of its workforce and skill sets.
Looking to the future, there are factors which are becoming increasingly important to the success and real estate performance of cities, which are not currently rated by the E-REGI Index. Qualities such as urban density, accessibility and wellbeing, not forgetting climate change resilience and sustainability, are becoming ever more significant.
Not only that, but the availability of data to measure and compare these factors across borders is improving.
Looking forward to the next 20 years, the E-REGI Index will seek to rate critical environmental factors such as air quality, the efficiency of transport and the sense of community, as well as others such as housing affordability, the existence of innovative industry and mixed-use resources.