Bank of England says better transport for Sheffield could boost GDP

The Bank of England’s Chief Economist used a speech at the University of Sheffield to argue that better transport infrastructure could boost average incomes in the city.

Delivering the annual Sheffield Political Economy Institute (SPERI) lecture, Andy Haldane – an alumnus of the University – said that around the world, higher populations are linked to higher average incomes, but many major UK cities punch below their weight. He said incomes in Sheffield ought to be 2.6 per cent higher than in Oxford – but they are in fact 44 per cent lower.

He called for a transport strategy designed to increase the ‘effective working population’ of cities like Sheffield, arguing that it could raise UK GDP per head by around 10 per cent, or £3,100.

Andy Haldane said: “Moving from a city the size of Oxford (population 535,000) to one double its size such as Sheffield (around 1.2 million) should be expected, on average, to boost GDP per head from £27,300 per head to £28,100 per head, or around 2.6 per cent. In fact, GDP per head in Sheffield is around 44 per cent lower than in Oxford.

“This is not just a North-South divide. Income per head in Sheffield is little different than in Doncaster just down the road (population 305,000).


“And it is not just Sheffield. Many large UK cities sit below the line: Belfast, Glasgow, Leeds, Manchester, Cardiff, Birmingham, as well as Sheffield… Why?”

He added: “[Tom] Forth’s work suggests transport networks are a large part of the explanation. By analysing commuting times into Birmingham at different times of the day, he provided a measure of the ‘effective’ working population. At peak times, the effective working population of Birmingham is perhaps 50 per cent smaller than its measured population due to poor transport infrastructure. This helps explain why Birmingham punches below its demographic weight…

“Imagine a transport strategy whose aim was to raise the effective working population of those UK cities currently operating below the line… Doing so would raise UK GDP per head by around 10 per cent or around $4,100 (£3,100) in today’s money.”

Genevieve LeBaron, Director of SPERI, said: “It was brilliant to hear from one of the University of Sheffield’s most successful alumni about how new approaches to economics can improve people’s lives in our city.

“Andy’s lecture highlighted the need for economic indicators to take account of local realities, which aren’t always reflected in prevailing models and calculations.”

SPERI brings together leading international researchers, policy-makers, journalists and opinion formers to develop new ways of thinking about the economic and political challenges by the current combination of financial crisis, shifting economic power and environmental threat. SPERI’s goal is to shape and lead the debate on how to build a new political economy.

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