Lancashire County Council Logo | Listen | Home | A to Z | Feedback | Complaints | Your Council | Business | Residents | Visitors |

Regional Gross Value Added
2006

February 2008

The North West of England, comprising the five sub-regional areas of Cheshire, Cumbria, Greater Manchester, Lancashire and Merseyside, is highly diverse in terms of its geography, population distribution, economic activity and relative prosperity. It is one of the most important economic and industrial regions in the United Kingdom. Indeed, its economic potential is greater than that of several individual European Union member states. Covering an area of 14,106 sq.km. or 5.8% of the total UK land area it is densely populated, uniquely containing two conurbations together with a large number of secondary urban centres. The region has the third largest population (6.9m) and economically ranks third only behind London and South East of England out of the twelve UK standard regions and countries. In 2006 the North West generated an impressive £111.3bn in Gross Value Added (GVA), a sum equivalent to 9.9% of the nation's wealth creation. This was in a range that extended from shares of 17.4% and 15.7% in London and the South East respectively to 2.3% in Northern Ireland and 3.4% in the North East. Total GVA in the UK in 2006 stood at well over £1 trillion or £1,155.0bn.

Viewed comparatively, however, the North West remains amongst the less prosperous regions of the UK (Table 1). In 2006 GVA per head in the North West, at £16,200 was just 87% of the UK average and was only 62% of the most prosperous London Region (which had GVA of £26,200 per head or a level more than 40% greater than the UK average). Amongst the nine English regions the North West ranked as 7th in the per head prosperity scale ahead of Yorkshire and the Humber and North East, the latter having GVA per head of just 81% of the UK average.

The importance of the three southern regions – London, South East and East of England – to the UK economy is clearly in evidence. Between them these areas account for nearly 43% of the UK's total economic output, more than double the 21% produced by England's three northern regions. Furthermore, such is their economic weighting that they are the only regions to have output per head figures above the UK average. Within this area, London dominates by providing for 17.4% of the UK's output. This position is further emphasised by workplace-based GVA estimates: on a workplace basis, London alone accounted for 19.3% of the UK's total GVA in 2006 and its GVA per head on the same basis at £29,000 was some 55% above the UK average.

Change in Gross Value Added

Over the latest period 2005-2006 overall total GVA growth (excluding that that cannot be allocated regionally) expressed in nominal terms before allowing for inflation, was 5.1% and all regions participated in this increase. The highest growths were in London (5.7%), Northern Ireland (5.6%) and the North East (5.5%). Economic growth in the North West at 4.5% was the lowest of all regions followed by Yorkshire and the Humber (4.6%). Viewed on a 'per head' basis, growth in the UK stood at 4.5%, embracing a range from 5.3% in the North East to 3.9% in Yorkshire and the Humber and the East of England. That in the North West at 4.3% remained below the national average.

Regional growth rates do often tend to vary year-to-year. Viewed over the longer term there is a clearer pattern. Expressed in absolute terms, total GVA increased in all regions between 1996 and 2006, though as shown in Figure 1 there have clearly been significant variations in economic performance between regions. Growth over the decade to 2006 was fastest in London, which recorded a real increase (i.e. adjusted for national inflation) of 49% - a highly respectable annual average growth rate of nearly 4.1%, followed by the South East and the South West with average annual growth of around 3.2%. At the other extreme Wales achieved growth of less than 2.0% per annum. Growth in the North West itself (at 23% over the period or 2.1% per annum) was well below the UK average, as indeed it has been for several decades and was also the lowest of the English regions. Recently the North West has slipped a notch in the growth rankings as the North East has experienced a modest spurt in its growth rate. Further information on GVA trends within the North West can be found in our analysis of Local Gross Value Added .

Bar chart showing the change in gross value added from 1996 to 2006 for the regions of the United Kingdom - see text for details Note Figures adjusted for inflation by use of national GDP deflator. Source ONS - Regional Gross Value Added, December 2007

A slightly different perspective is given from an examination of GVA Per Head growth rates as illustrated in Figure 2. Regional total GVA shares are partly explained by changes in the size of their populations. Over the longer term relative movements in GVA tend to move in line with relative population growth and changes in the GVA per head indices are generally less marked than changes for overall GVA shares. For instance, total GVA growth in the London Region over the decade to 2006 of over 49% or 4.1% per annum was accompanied by strong population growth so that the rise in GVA per head was much lower at 38% or 3.3% respectively. Similar effects were felt in the other southern regions. In the case of the North West where population change was small, growth in GVA per head (at 22.3%) over the decade was virtually on a par with total GVA growth (23.1%). In these comparative terms, economic growth in the North West was closer to the national average and raised the region's growth ranking by two places just above the Scotland and the East Midlands.

Bar chart showing the change in gross value added per head from 1996 to 2006 for the regions of the United Kingdom - see text for details Note Figures adjusted for inflation by use of national GDP deflator. Source ONS - Regional Gross Value Added, December 2007

GVA by Industry

Due to a temporary suspension of Input/Output tables to facilitate re-engineering work on the UK National Accounts no industrial breakdowns of local GVA data are published by ONS for 2005. Estimates for 2004 published in December 2006 are retained in Tables 2 and 3 but these do not sum to the revised 2004 GVA totals provided with the latest estimates.

Part of the explanation for the variation in regional GVA per head and economic growth rates lies in the marked differences in the industrial structure of the regions. Factors such as the changing competitiveness of different sectors may affect industries, and therefore regions, very differently, as may short-term factors such as changes in oil or agricultural prices. Thus, in the North West, more than18% of the region's wealth was generated by manufacturing industry, against a 14% share in the UK and only 11% in the South East. Conversely, just 28% of the region's wealth came from the financial and business services sectors against a 34% share in the UK and no less than 37% in the South East. Figures for individual sectors of activity for the decade show that manufacturing industry (and indeed, production industry generally) was amongst the slowest growing sectors in the North West and that it was also lagging the UK average. The business services sector however was one of the fastest growing. The rate of increase in this North West sector lagged the UK over much of the 1990s but more recently it has accelerated and in 2002 overtook manufacturing as the largest single economic sector in the region

Overall, service industries as a group now dominate the economy both nationally and across all regions. In 2004 the service sector accounted for 76% of all UK GVA; the figure in 1989, the earliest year for which comparable regional data are available was 62%. Its contribution was greatest in London where the service sector accounted for 87% of the economy as measured by GVA in 2004 compared to 76% in 1989 (Table 2). Indeed, London's service sector alone accounted for 15% of the total economic activity of the UK in 2004, greater than the total contribution of all other UK countries and regions except the South East. In contrast to services, the contribution to UK total GVA by the production industries (mining and quarrying, manufacturing, energy and water, and construction) has declined from 36% in 1989 to 23% in 2004.

This page was compiled by Peter Kivell .

All enquiries from the media should be sent to Corporate.Communications@lancashire.gov.uk .

Any other questions about the content of this page may be sent to EconInfo@lancashire.gov.uk .

For all enquiries about the county council's services , contact the Customer Service Centre on 0845 0530000 (01772 530000) or at Enquiries@css.lancscc.gov.uk .

Change Text Only Settings