Local economies will be crucial for the UK’s recovery, but recent rises in business productivity in North seem to suggest, paradoxically, that bosses are not expecting an imminent resurgence

The North’s economy is twice the size of Scotland, and larger than that of Sweden, Denmark and Belgium. But how productive are Northern workers? How efficient are we at actually doing things compared to the rest of the UK? Until recently the answer to this question was simple: not very, and getting worse, while the country as a whole is faltering relative to its competitors.

However, recent figures on ‘productivity per hour’ and per filled job in different areas of the UK show that (while the gap is still wide) between 2009 and 2011 all three Northern regions gained ground on the national productivity rate, while London slipped.

Earlier this week, yet more statistics revealed that areas whose economies aren’t conventionally thought of as being highly productive – Blackburn and Darwen, Durham, Blackpool, Bradford, Sunderland and Tyneside – were also gaining ground.

With the North having restructured its economy away from heavy industry in favour of modern sectors such as biotechnology, advanced manufacturing, business and financial services, are these figures a result of these changing structures, and a glimpse of changing fortunes?

This is, lamentably, unlikely. Despite the efforts and innovations of companies in the North, these figures are more likely to be showing the very opposite of the business confidence needed for the North to drive its way out of recession.

Recessions can have a different impact on different firms’ decisions, depending on how they feel about future prospects: if they are confident of resurgence they are likely to hold on to staff and tolerate low productivity; if they are less confident they may lay off staff and so will, in the short term, become relatively more productive.

Does this mean therefore that London firms are more confident of their prospects than Northern firms? Paradoxically, is improving productivity a bad sign? London’s over-reliance on the finance sector is likely to play a large part also – a sector which has seen a recent dip in productivity – but these figures do raise questions.

However, the questions raised are not simply about the “UK economy”, but about the economy in Sefton, in Sunderland, in Northumberland, in Bristol, Dudley and Dunbartonshire.

In short, the questions that need asking relate to the real economies, as people go about their work and spend their money. These are questions that are rooted in people’s lives as they are lived, not as they are theorised down in Whitehall and on Threadneedle Street.

It is increasingly being recognised – not least thanks to the work of Tory grandee Lord Heseltine, which the government (partially) acknowledged – that it is these local economies that are the cornerstones and building blocks of our economy. As the country tries to dig its way out of recession, driving local growth is not only the most efficient way to drive national growth, but is the best way of engendering prosperity for the people who labour to make that growth happen.

• Luke Raikes is a Labour councillor for Baguley in Greater Macnhester and a researcher at IPPR North. He tweets @lukeraikes