SCOTLAND’S manufacturing sector is the second most productive in the UK, new research has found.

However, London’s overall productivity is more than 50% higher than any other area – making the Tory Government’s aim of “levelling up” very difficult, according to the study by Durham University Business School.

Investigating the reasons for the huge disparity, the researchers concluded that London’s proximity to government and good infrastructure has helped it leap ahead of the rest of the UK.

They pointed out that recent government investment in transport infrastructure has favoured London, with average annual investment 2.8 times higher than in the rest of the UK between 2014-15 and 2018-19.

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The researchers found that differences in company characteristics such as size or multinational ownership have a small impact and are not the most dominant reason as to why London’s productivity is significantly higher than other places in the UK.

They said London dominates because its companies benefit from their location, with factors such as governance, infrastructure, physical geography and agglomeration (clustering) economies more important than size or multinational ownership.

The results revealed London to be 52-54% more productive than the south east of England, the second most productive area. Wales was identified as the least productive of the 11 “regions” in the study.

In terms of the manufacturing sector, Scotland is the second most productive place in the UK behind London, while Scotland’s services sector is the fourth most productive in the UK, behind London, the south east of England and the east of England.

Despite being behind London, Scotland’s cities compare well with cities elsewhere in the UK in terms of overall productivity. Nine of the 12 areas with the highest productivity are within 100 miles of Central London with the other three being Greater Aberdeen, which is ranked first, Edinburgh and Glasgow.

Scotland also compares well with the North of England in terms of overall productivity.

“The task of levelling up the UK from the Conservative government is both an ambitious but difficult one,” said Richard Harris, Professor of Economics at Durham University Business School.

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“When it comes to the manufacturing sector, the difference in the levels of productivity is evident between London and elsewhere, while in terms of the services industry, this different is even higher.

“As plant characteristics cannot explain this difference, an obvious way for Government to help boost productivity across the board – such as increasing the proportion of plants engaged in exporting, research and development or foreign-owned – will not have the desired effect of ensuring elsewhere is working as efficiently and effectively as London.”

The researchers believe that the findings from the study can help in identifying the size of the task faced in “levelling-up”, as well as in avoiding policy initiatives for levelling up that may actually have only a limited impact on productivity which are unlikely to close the gap with London.