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A new report by Center for Cities reveals workers in London will earn more by August 2025 than those in Northern cities will make in a year.
The Center for Cities has revealed the regional pay divide across the UK is more of a chasm than a gap. According to a recent report, London workers are earning almost £20,000 more annually than those in lower-paid areas.
By August this year, it’s predicted that the average worker in the capital will earn what their counterparts in Northern cities like Burnley or Sunderland take home over the span of twelve months.
At the center of this disparity is the relentless rise of AI and fintech jobs, which remain stubbornly clustered in the capital and a handful of other urban hubs.
Nearly all cities and large towns with above-average salaries for the UK are located in the Greater South East. Only seven places outside of this region have salaries above the national average – Leeds, Warrington, Derby, Swindon, Bristol, Aberdeen and Edinburgh.
The pace at which AI and tech are dominating the job and financial markets is widening this divide at an exponential rate. In turn, low-paying jobs which proliferate outside major cities, like manufacturing, logistics, and public services, become increasingly underappreciated – despite their being essential to the running of society (lest we forget the pandemic).
London accounts for only 15% of the UK’s population but attracts 63% of its venture capital funding. With a mass of tech hubs and high-skilled professionals, the city offers workers higher salaries and unrivalled career progression.
By contrast, poorer areas are caught in a vicious cycle. Lower wages make it harder to attract top-tier talent, which in turn makes these areas less attractive to high-growth industries. The result is a deepening of regional economic divides.
One thing that looked set to change all of this was the sudden, widespread adoption of remote working. The pandemic quickly shifted the way we approach our 9-5, with thousands of employees relocating outside of the capital to enjoy cheaper living expenses, all while maintaining their roles from the comfort of a computer.
But in the subsequent years, debates over remote work have only grown more divisive, with most major corporations calling for a return to the office (if not entirely then at least three days a week).
This fixation on in-person employment makes it extremely difficult for individuals from areas outside London to access the same employment opportunities. And for junior workers, or those on lower salaries, the regional economic divide only grows. After all, spending hundreds of pounds per week on travel isn’t an option for most.
AI has also complicated the issue with the rise of new job titles that favour tech hubs like London. In areas like Burnley, roles in warehouse management or customer service are more readily accessible, but these are jobs that AI threatens to automate out of existence altogether.
On a government level, promises to ‘level up’ the country have remained meek. And efforts to decentralise economic power, from the creation of mayoral authorities to the establishment of regional investment funds, have also been piecemeal.
Investing in education and skills training for Northern communities is an obvious part of the solution, but it remains insufficient. Without the infrastructure to support high-growth industries these regions struggle to attract the kinds of jobs that can close the pay gap.
Those in socio-economic forums have discussed potential solutions online, with business owner Nik Wheat suggesting the UK should focus more on the potential of its ‘second cities’.
‘Manchester, Birmingham, Leeds & Glasgow are nowhere near [the] top end of their potential. [This] demonstrates, yet again, that narrow minded focus doubling down what we have in the Greater South East holds the country back and suppresses the ability to grow demand throughout the economy.’
Tax incentives for companies willing to set up shop outside the M25 could help, as could a more aggressive approach to funding startups in the regions.
These trends often feel inevitable, framed as the price of progress in a tech-driven age. But economic divides are far from inevitable. They’re the result of deliberate policy choices, investment strategies and societal priorities that benefit those at the top.
The rise of AI is consolidating wealth and opportunity in a select few urban enclaves, leaving the rest of the country to contend with widening disparities. But the economic future of Britain should not be left to geographical chance, nor should it be dictated solely by market forces.
Just as it can cast division, economic innovation is also a vital tool for uplifting the entire country. Whether it’s used to such ends is another story.
