Cambridge Growth – Project detail
The Growth Project has two work streams – Growth Forecasting and Economic Forecasting.
Image: 72soul / 123RF Stock Photo
1. Cambridge Growth Forecasting
With the re-creation of the Cambridge Cluster Map and the release of data revealing the remarkable growth of Cambridge companies during 2014/15, the Growth Project came to the end of its first phase.
The Cambridge Cluster Map
Since the project group’s formation, we have been concerned with establishing an authoritative analysis of the current scale, make-up and growth rate of economic activity in the region, defined by a 20 mile radius around Cambridge. We commissioned Dr Andy Cosh* to create a dashboard to monitor growth in Cambridge using the original Cluster Map created by Sherry Coutu and Trampoline Systems as a starting point. We began by updating and re-verifying the original Cluster Map data, adding in data from sectors outside of high tech and then putting in place curation to keep it up to date. For the first time, there is now a sound and robust measure of the Cambridge economy, and how it is growing, but it should also be possible to wind the clock backwards to see how Cambridge has been growing in the past.
The Cambridge Cluster Map was officially launched in July 2016 and is a dataset of information on over 20,000 businesses in the Cambridge region. Using the new methodology, it specifically monitors the growth of Cambridge-registered companies, in terms of their global turnover and employment, and tracks the number of Cambridge-active companies, and public and charitable sector research organisations.
Cambridge-based companies are those with their primary trading address within this area, or those that do not give a primary trading address but have a registered office in this area. Cambridge-active companies are those who have neither their registered office, nor primary trading address in the Cambridge area but do have a trading address in the area that we have identified, examples being Marks & Spencer and Amazon. Non-corporate Knowledge-intensive (KI) organisations are those research institutions that are located in the defined region which are neither companies, nor partnerships. Examples of these are the British Antarctic Survey, the Wellcome Trust Sanger Institute, and Cambridge University.
The map is refreshed approximately twice a year and will be updated with wholly new data annually. The first update is scheduled for end-January 2017 and will include data for 2015/16 as well as improved functionality. Read more about the map.
* Dr Andy Cosh is a Reader in Management Economics, at the Centre for Business Research of the University of Cambridge.
Using our unique growth measurement methodology, we have so far produced two consecutive sets of growth data for the Cambridge city region, one in February 2016 and most recently in January 2017. The latter shows that the remarkable growth that we revealed for 2014-15 continued in 2015-16. The data reveals that the growth of Cambridge companies continued at around 7% on a one, three and five-year view. Global turnover of Cambridge companies increased by 7.6% to £35.7bn, up from £33bn the previous year, and global employment grew by 7.6% to 210,292. The number of companies with their home base within 20 miles of Cambridge has grown from 22,017 to 24,580. Over the past five years (2010-11 to 2015-16) the turnover of Cambridge companies has grown by 7.5% p.a., and employment by 6.6% p.a.
Turnover and employment in the life science sector grew by 32.1% and 10.5% respectively in 2015-16, and construction and ICT was also buoyant with the former enjoying growth of 11.8% in employment and 7.2% in turnover. Within the Knowledge-intensive (KI) sector as a whole, turnover grew by 10.5% and employment by 6.8%. KI intensity remains high at 34% of turnover and 29% of employment.
These figures demonstrate the importance of Cambridge, not only to the region, but also the value it offers on a national scale as a net contributor to the UK. As cited by the Centre for Cities, Cambridge was the 3rd fastest-growing city for jobs in the country between 2004 and 2013. Read the full January 2017 Growth press release.
The data covers the year up to April 2016, and shows turnover and employment growth for each company and sector. It is likely that a similar data draw will be undertaken for the Peterborough area, which will mean that we will have 6 years of data for the combined, devolved economy for when the new Mayor is elected in May 2017.
Impact on Housing
This economic growth has led to an understandable increase in demand for housing, with Cambridge now ranking one of the most expensive places to live in the country. In 2004 average house prices in Cambridge were 9.2 times average earnings¹, but by 2016 this had increased to 15.8 times average earnings² giving Cambridge the third-highest affordability ratio behind London (2nd) and Oxford (1st). Where people live, how they move around and the infrastructure that is required to ensure Cambridge continues to be an attractive place to live and work is why we are now gearing up for our main piece of research on growth.
¹ Cities Outlook 2015 – Centre for Cities ² Cities Outlook 2017 – Centre for Cities
2. Economic Forecasting
We are working with the Local Authorities to take their current economic model input data and add local understanding to it by using local business and sector-specific expectations rather than national ones. We need to know what businesses think future growth pressures will be and what their growth might be if those pressures were better managed, in order to prioritise the infrastructure initiatives that will need to be taken. Creating such a bottom-up regional growth forecast has never been attempted before, and we have a great learning curve to get round to do it, but it should be very powerful when completed.
For example Cambridge has, with Marshall and its supply chains, a large aerospace component in its economy so the growth expectations of the aerospace sector will feature strongly in the local forecast. Where this breaks down though is that the national forecasts will be dominated by what Rolls Royce and BAe’s growth expectations are, which could be very different from Marshall’s.
So a survey involving a group of economists and a programme of interviews of the Top 100 companies in the Cambridge area is now being undertaken, and is focusing on three aspects: the connections between the Cambridge companies and the rest of the UK economy; local constraints on their growth; and their estimates of their sector’s growth over the next 5 years. We will also ask two short questions on the impacts of Brexit on their growth. This survey will create a bottom-up forecast of how much these companies think their sectors will grow over the next decade. The results will also be available in January 2017.
A further supplementary technical task of comparing the actual and forecasts growth rates of the Councils’ East of England Forecasting Model with the Cambridge Ahead data will also be undertaken.
Preparation is in hand for the spatial modelling of the forecast growth of the Cambridge sub-region, in an exercise which will be shared with the Councils’ planning officers. We will work with spatial planning experts at the University of Cambridge – from architecture, land economy and economic geography – to create alternative pictures of how the city and the region might develop. We know that the city alone will not be able to cope with all the growth, and how it connects and works with the other towns in the region will be hugely important to creating growth and goodwill, and in prioritising infrastructure initiatives.
This will take as its horizon the year 2050 and will result in a series of scenarios of development. We are also planning an exercise of progressive public engagement with these scenarios, so that a consensus about a Vision for 2050 can be created. This work will begin in February 2017 and will take 18 months to complete. We are also considering whether Peterborough should be included in this exercise, to produce a complete picture for the future devolved economy.