Is GDP really an effective way of measuring the economic well-being of the South East? At Grant Thornton, we have developed a Vibrant Economy Index to take another look at how we can measure how the whole of society is being enriched.
It's not new to suggest that using gross domestic product (GDP) as a measure of a society's success has run its course. While we have seen overall growth in GDP over recent years, as we recover from the financial crash, this wealth has been unevenly distributed across regions and groups of people, creating a bigger gap between the rich and those who are "just managing", which the campaigns for Brexit expressly tapped into. A new way of measuring economic well-being is now an imperative.
We believe that our economy should benefit society as a whole; a vibrant economy is about more than financial growth and economic return. Our index tackles this head on. It identifies six broad objectives for society: prosperity; dynamism and opportunity; inclusion and equality; health, wellbeing and happiness; resilience and sustainability; and community trust and belonging.
For each of these we have put together a ‘basket’ of 52 national statistics that together aim to measure these objectives. The most vibrant place will not necessarily be the one that has the highest average score across the six baskets – a place with a lower average score but a balanced equilibrium across all areas may be more vibrant.
How does the South East perform?
In this analysis, the area shows considerable variability, with districts such as Horsham and Mid-Sussex featuring at one end of the Index, Adur and Hastings at the other. However, it is only when drilling down that this analysis starts to reveal further interest. Crawley for instance scores highly for economic prosperity, which means that it is producing wealth and jobs but below the national average for dynamism and opportunity, resilience and sustainability. This suggests that it is not developing an entrepreneurial and innovative culture or maintaining a sustainable environment to stimulate future growth. Whereas for instance, Brighton and Hove scores below the national average in the inclusion and equality indicator, but high on dynamism and opportunity as well as community, trust and belonging. Is Brighton and Hove missing some of their district’s talent simply because they are failing to connect with them?
The Vibrant Economy Index acknowledges that progress is personal and local, as well as national. It can mean different things to different people in different places, which inevitably means that initiatives to increase the vibrancy of a place need to be more sophisticated than ‘increase GDP’.
The Vibrant Economy Index could help to identify those areas where new policies and action could have a real impact on shaping a vibrant economy, as well as helping place-makers (planners, local government, community groups and the like) be realistic about the limitations of the impact of their actions.
In addition to this, over the past 18 months, we have brought together more than 1000 community and business leaders up and down the UK to discuss what matters to them and how they can work together to bring this to life.
We collated these ideas and added feedback from our clients and contacts to create Shaping a vibrant economy - A blueprint for the UK, a set of policy recommendations that we are sharing with government.
We want the government to use this opportunity to unlock and accelerate our country's potential across three key areas.
- Trust - helping to restore purpose to financial markets, championing impact investing.
- Growth - putting collaboration at the heart of the UK's industrial strategy to boost exports, develop skills and unlock innovation.
- Place - devolving powers from Westminster and Brussels to foster vibrant local economies.
If you would like to discover more and understand how this may impact your own business, contact Jon Maile on +44 (0)1293 554034.
Jon Maile, Partner, Grant Thornton, jon.maile@uk.gt.com
Published: 21 April 2017
Summer 2017
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