Would the UK have an economy like Ethiopia without London and the South East?

3 December 2012

"...I would like somebody, anybody, to fight for me — the middle class of London and the South East. The wealth created through long hours — the area works at least 10 per cent longer than anywhere else in the UK — is truly Herculean."

"As a standalone entity, the people of Berkshire, Buckinghamshire, Sussex, Hampshire, Kent, Oxfordshire, Surrey and London are 18th in the global GDP league, just ahead of Indonesia and just behind Turkey.

"If you took this region out of the UK economy, it would be called Ethiopia."

Kelvin MacKenzie in the Telegraph, 3 December 2012

The words of former Sun Editor Kelvin MacKenzie featured on several occasions in last week's Leveson Report. So too the readers of this morning's Telegraph were treated to the words of the outspoken columnist - this time in relation to the UK's north-south divide.

Mr MacKenzie wrote that he was "sick and tired of subsidising folk from the rest of the country", drawing on statistics pointing out that residents of London and the South East work at least 10% longer than anywhere else in the UK and that, without these regions, the UK would equate to Ethiopia in the world GDP league table.

How many hours do we work?

Looking to provisional figures from the 2012 Annual Survey of Hours and Earnings (ASHE), the average number of hours worked for a full-time employee in the UK (there are no figures for the self-employed) was 39.1 per week including overtime, and 18.1 hours for those working part-time.

The regional variance in this is very slight. The average number of hours worked in London was 38.5 hours per week and in the South East was 39 hours - both in fact less than the UK average.

Looking to overtime instead, the median amount for by full time workers in the UK was 4.1 hours per week; in London it was 4 hours and in the South East this figure stood at 3.7 hours. Again both figures are lower than the UK average.

It's very unclear where Mr MacKenzie's '10%' difference in favour of the southern regions comes from.

He can, however, appeal to figures showing UK regional 'Gross Value Added' (GVA). This abstruse term measures the difference between a region's economic output and its consumption, and gives us an idea of the productivity of each region relative to the economy as a whole.

On this measure, London and the South East are more obviously out in front:

Where would we be in the world without London and the South?

The United Nations (UN) compile helpful national accounts data for all countries in the world - the most recent data being for 2010. Placed in a league table, the UK as a whole ranks sixth - with a total GDP of $2.2 trillion, behind the United States in first place with $14.5 trillion.

The most useful source of data breaking down the UK's GDP by region is provided by Eurostat - which compiles a database comparing the GDP of EU countries and their sub-regions. The most recent figures are for 2009, showing:

UK total: $2.2 trillion
London: $466 billion
South East: $310 billion
North West: $201 billion
East: $185 billion
Scotland: $177 billion
South West: $164 billion
West Midlands: $156 billion
Yorkshire/Humber: $150 billion
East Midlands: $135 billion
Wales: $76 billion
North East: $68 billion
N Ireland: $47 billion

Comparing these for the same year against the UN, we can assess how excluding certain regions changes the UK's position. Kelvin MacKenzie is correct that a country comprising London and the South East alone ($776 billion) would fall 18th in the global league table, just ahead of Indonesia.

However, the combined 'economies' of these two regions total less than half of the total UK GDP, so taking these two regions out of the economy leaves the rest of the UK in a higher position - 10th in the world - than London and the South East going it alone.

This puts a hypothetical UK without London or the South East alongside countries such as India and Canada, a long way off the economy of Ethiopia in 101st position.

It's difficult to see where the former editor has drawn this statistic, and the claim bears no resemblance to the facts. At the very least, it is unclear what the author means by introducing Ethiopia to the comparison.

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