Thayer Watkins
Silicon Valley
& Tornado Alley

The Regional Economies
of the United Kingdom

The United Kingdom is made up of England, Scotland and Northern Ireland. The standard regional divisions of England are:

Wales and Cornwall are politically part of England but distinct historically and culturally. Scotland is made up of the Highlands and Lowlands. Wales, Cornwall and the Highlands of Scotland have celtic backgrounds. There are regions of England that also have Celtic backgrounds but of less significant political influence.

The South East

Historically, London and the South East have dominated the United Kingdom. Manufacturing has been important for the South East but relatively less important than for other areas. What makes the South East distinctive is its service industries such as insurance, banking and shipping. Government administrative offices are concentrated in London. Corporate headquarters are typically also located in London.

Because of the lower relative importance of manufacturing for the economy of the South East it was less affected by recent recessions and the decline in exports which resulted from the anti-inflation policies of the Government. The U.K. was the first nation to develop regional policies. In the 1920s it began programs to promote economic growth in poorer regions. Generally regional policy in the U.K. has been to direct employment growth away from London towards the economically weaker regions. This has not always been successful.

East Anglia

East Anglia is the fastest growing region. It contains Cambridge with its Cambridge University. High technology industries such as electronics, aerospace and telecommunications has been important here. East Anglia has access to the London market but has a more pleasant living environment. It is also closer than London to the European market, but this does not seem to be an important factor in its growth.

The South West

The South West is relatively prosperous, with the third highest income (after the South East and East Anglia). It contains the major port cities of Plymouth and Bristol and it includes Cornwall which has the mildest climate of the U.K. Tourism and vacationing are important for Cornwall now but in the past mining was the mainstay of the economy.

The West Midlands

The West Midlands is the industrial heartland of Britain. Its economy has been centered around Birmingham, the second largest city in the U.K., with the adjacent centers of Black Country and Coventry. With increasing global competition in manufacturing the West Midlands has had a difficult time economically. The U.K.'s automobile industry was located here but it has lost out to foreign competition. Since 1979 employment in manufacturing in West Midlands has fallen 44 percent. There has been growth in service industry jobs but not enough to offset the decline in manufacturing.

The East Midlands

The East Midlands is not a coherent region. Instead it is a patchwork of counties. Some counties are industrial but others are primarily agricultural. Coal mining has declined but clothing and footwear manufacturing are surviving. Generally the economic performance of the East Midlands economy has been good. Nottingham and Leicester are its major cities.

The North West

The North West economy in Manchester and Liverpool industrialized in the Industrial Revolution. The population grew on an economic base in manufacturing. The population of the North West region is second only to the South East among the regions of England. But those traditional manufacturing industries have not been able to prosper in the face of the global competition. Chemicals, vehicles, ship building, engineering, textiles and clothing have suffered losses. Consequently there has been a net migration out of the region in recent times.

Yorkshire and Humberside

The major cities of Leeds, Bradford and Sheffield have been associated with specialized manufacturing. Even though this region lost 30 percent of its manufacturing jobs between 1979 and 1989 it still has a relatively high share of its economy in manufacturing. High tech employment is relatively small. Some economic recovery has come through Japanese motor vehicle companies establishing plants in this region.

The North

The North had not industrialized so it was not so hard hit by the loss of manufacturing jobs due to increasing global competition. The North has been traditionally more oriented toward tourism. Its Lake District is one of the most prominent vacation spots in the country. Hadrian's Wall, built two thousand years ago by the Romans to guard against the Celts, is another major tourist attraction. In recent years it has gained some manufacturing employment through foreign investments such as a Nissan automobile plant.


Wales was one of the places of refuge of the Celtic people of Britain after the Anglo-Saxon invasion. The name Wales comes from an Anglo-Saxon word meaning foreigner. Historically Wales with its mountainous terrain has been isolated and agricultural but in the nineteenth century with the development of the coal deposits the economy shifted away from agriculture and began to be integrated into the national economy. In recent decades there has been substantial foreign investment in Wales. This has more than offset the decline in employment in coal mining. So employment has been growing but not rapidly. The industrial development has been concentrated on the south coast at Swansea and Cardiff.


The lowlands of Scotland was one of the growth areas of the Industrial Revolution. The decline in heavy industries such as iron and steel, ship building and coal mining has hurt Scotland severely. The growth of services has resulted in increased demand for part-time female workers and left the unskilled male labor force unemployed. The unemployment rates reached average levels of 16 percent in 1992 with Glasgow having unemployment rates of 40 percent in some areas. There have been two bright spots for the economy. There has emerged an agglomeration of high tech, capital-intensive light industries such as electronics. This development is known as Silicon Glen. It is largely foreign owned, with American companies accounting for about half. The other bright spot is the development of the oil and gas industries in the North Sea which has led to the prosperous business of providing supplies for the oil and gas companies. Aberdeen has especially benefited from this development. The rural highlands have always been an economically backward area and unemployment rates are typically on the order of ten percent. Tourism is about the only economic base that is feasible for this area.

Northern Ireland

The economy of Northern Ireland has been generally depressed compared to the economy of the rest of the U.K. (but advanced compared to the economy of the Irish Republic). For example, incomes in 1990 were 31 percent lower in Northern Ireland than the rest of the U.K. In February of 1994 the unemployment rate in Northern Ireland was 13.2 percent compared to 9.8 percent for the U.K. overall. In 1993 about half of the unemployment in Northern Ireland was long term (one year or more) compared with about one third for the U.K. as a whole. Within Northern Ireland there are substantial differences. Generally the counties of the west fare worse than Belfast. Among residents of public housing the unemployment rate is in excess of 50 percent. The economic problems of Northern Ireland are related to the high rate of population growth, the low productivity of manufacturing and the high dependence upon the public sector.

The distribution of population among these regional divisions in 1971 was:

South East17.1335.3
East Anglia1.673.4
South West3.797.8
West Midlands5.1010.5
East Midlands3.296.8
Yorkshire &
North West6.7313.9

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