How does the Cornish economy compare with the rest of the UK?

This June, Cornwall is hosting the G7 (Group of Seven) summit. Leaders from Canada, France, Germany, Italy, Japan, the UK, the United States and the European Union are gathering in Carbis Bay to discuss topics ranging from Covid-19 recovery plans to the looming threat of climate change.

The G7 is an organisation representing the world’s largest ‘advanced’ economies. The group accounts for 40% of global GDP and 10% of the world’s population, and it has been meeting in various forms since 1975 (BBC News, 2021).

But what about the county hosting the talks? How does Cornwall’s economy compare with the South West region and the wider UK?

Challenges on the peninsula: productivity and poverty

Cornwall’s economy is dominated by agriculture and tourism. In terms of the amount of value produced by individual workers (gross value added per head), it is the fourth least productive region in the UK, with only West Wales and the Valleys, Tees Valley and Durham, and South Yorkshire performing worse in 2019. Cornwall is also substantially below the rate for the South West region, and lags behind the national average (see Figure 1).

Figure 1: Ten weakest regions by gross value added per head (with national benchmark)

Source: Office for National Statistics (ONS)

Yet in terms of unemployment, Cornwall actually outperforms the UK average and is in line with the South West region. Figure 2 shows model-based estimates for unemployment from the Office for National Statistics (ONS) from 2004 to 2020.

Even in 2020, as many businesses were forced to close as a result of the Covid-19 crisis, Cornwall’s unemployment rate was estimated at 4%, 0.6 percentage points below the UK rate.

Figure 2: Unemployment, model-based estimates (Cornwall compared with the South West region and the UK)

Source: ONS

What jobs are common in Cornwall?

The unemployment rate doesn’t tell us everything. The types of job that people do are also important determinants of their income and wellbeing, as is the vulnerability of an occupation to shocks such as Covid-19.

There are sectoral differences between Cornwall and the South West region, as well as the rest of the UK. Figure 3 highlights that compared with the rest of the country, people in Cornwall are more likely to work in either hospitality or health and social care, but they are rarely employed in high-value, high-salary professions such as finance and insurance or science and technology.

Pubs, cafes and restaurants have been particularly hard hit by lockdown restrictions over the past year, suggesting that Cornish workers may be more vulnerable than most to the economic effects of the pandemic.

But this heavy reliance on hospitality services could end up aiding Cornwall’s post-Covid-19 recovery. With international travel restrictions continuing to hamper UK tourists’ ability to travel overseas, domestic holiday destinations like Cornwall are already experiencing surging demand. By April, there were already reports that 98% of holiday accommodation in the county was fully booked for the season. This has enabled owners and businesses to charge higher prices too. The boost may last for many seasons to come.

Figure 3: Employee job by sector (Cornwall compared with the South West region and the UK)

Source: ONS

The data also reveal lessons about Cornwall’s history. Even today, at 0.4%, the percentage of jobs in mining and quarrying is above the regional and UK average (0.2%). Once an industrial hub for extracting tin and other minerals, most mines have long since dried up. But the legacy of the industry, although hugely diminished, appears to remain in place for now, even if the future of drilling in the region is uncertain.

What about pay?

This sectoral breakdown may have an effect on pay. Workers in Cornwall are typically paid less than the South West regional or UK average. A typical full-time worker in Cornwall and the Isles of Scilly earns just 89% of the regional average and 84% of the national average in terms of weekly pay (see Table 1).

Table 1: Regional weekly pay by gender (Cornwall compared with the South West region and the UK)

Source: ONS

What about the cost of housing?

Famed for its panoramic beaches and dramatic clifftops, Cornwall has long been a popular UK tourist destination. As a result, demand for holiday homes (or second homes) is substantial. According to one study, with 18,621 empty residences, Cornwall has the highest number of vacant houses of any local authority area in England. It is estimated that 13,642 of these buildings are second homes, mostly used as holiday lets (Cornwall Live, 2020).

Looking at the data, Figure 4 suggests that, broadly speaking, the year-on-year change in Cornish house prices tends to follow the wider UK trend, although a steeper drop was observed from 2016 to 2017. The chart indicates that in recent years, house price growth in Cornwall has started to outstrip the UK average very slightly.

Figure 4: Year-on-year change in house prices, detached house (Cornwall compared with the UK)

Source: Land Registry

Crucially, despite its status as the fourth poorest county in terms of value added per head (see Figure 1), Cornwall ranks 21^st most expensive in terms of average house prices. As of May 2020-April 2021, the average cost of a house in the county was £313,000 (Plumplot, 2021). This means that it is currently more expensive to buy a home in Cornwall than it is in Cheshire, Greater Manchester or Norfolk.

And as more workers consider continuing with remote working after the pandemic, regions like Cornwall appear to be popular destinations for those leaving cities. According to housing website Rightmove, Cornwall has overtaken London as the most searched-for location by potential buyers. In the past year, six of the ten most popular locations for property buyers were in Devon or Cornwall, and searches for the Cornish village of Stithians have increased by 224%.

What does all this mean for the Cornish economy?

As eyes around the world turn to the Cornish peninsula, a juxtaposition is visible. Broadly speaking, the G7 summit is about economic recovery and future prosperity. And yet Cornwall is not a universally prosperous part of the country and has faced many challenges during Covid-19.

While the meeting may well raise the status of the county on a global level, issues such as low wages, high housing costs and a heavy reliance on tourism are likely to remain considerable policy challenges long after the world leaders depart.

Where can I find out more?

• Labour market in the regions of the UK: May 2021: This ONS report provides data for local authorities and regions of the UK.
• Cornwall property prices: This webpage provides an overview of the Cornish housing market.
• Labour market profile – Cornwall: This statistical report from the ONS focuses on the labour supply and demand in Cornwall and the Scilly Isles.

Author: Charlie Meyrick

Photo of Carbis Bay, Cornwall by Andy F from Wikimedia Commons