Worker productivity in north grew twice as fast as London in 2016

Workers in Manchester offices at dusk. Photograph: Christopher Thomond for the Guardian

The productivity of workers in northern England grew twice as fast as London in 2016, according to official figures, in a sign that the north’s economy is making progress despite huge challenges in bridging the country’s regional divide.

Economic output per hour worked increased by 1.8% in the north versus 0.9% in the capital over the course of 2016, according to an IPPR North analysis of figures from the Office for National Statistics. The thinktank also found the north’s productivity grew at roughly the same rate as the capital over the past five years.

The figures will encourage supporters of the northern powerhouse project designed to boost the region’s economy, amid lingering concerns over the government’s commitment to regional devolution. But they also show the scale of the challenge despite the progress being made.

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While economic output per hour worked in the north is improving, only London and the south-east had productivity levels above the national average, according to the ONS. Wales and Northern Ireland were the weakest regions.

Total economic output increased by 5.1% in London compared with 2.7% in the north, although the capital required workers to put in much longer shifts in order to make those gains. The number of hours worked went up by 4.1% in London versus just 0.8% in the north.

Tower Hamlets, home to the Canary Wharf financial services centre, had the highest labour productivity levels among 168 areas of Britain, with an efficiency level 72% above the national average. Powys ranked bottom, with workers in the rural area of Wales producing 35% less economic output per hour worked than was average.

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The ONS figures also showed how growth in low productivity jobs over the last decade had fuelled a slowdown in Britain’s overall economic efficiency. The issue has vexed the chancellor Philip Hammond, as weaker economic growth stands to erode the public finances and hold back workers’ pay.

Luke Raikes, senior research fellow at IPPR North, said devolving industrial strategy to regions, cities and counties was an important part of the solution. “The UK has never had regional industrial strategies and has fallen behind as a result,” he said.