Regional productivity disparities in the UK is all about London and the SE versus the rest. Agglomeration efects are present in all regions. But history explains the power of London to attract highly-skilled individals to move there to set up new firms and industries. A recent example is AI and fintech in the Shoreditch and Kings Cross areas.

Restricting immigration, particularly of the low skilled, is one way to raise both wages and productivity. Firstly, economic theory (the Solow model) suggests that the level of wages will be higher, the slower the growth rate of the labour force. Reducing immigration will lower the growth rate of the labour force. The reason is that slower growth of labour increases the long run capital-labour ratio, leading to higher wages and productivity. Secondly, as a matter of fact since 2007 faster growth of labour has been associated with slower growth of productivity in the Western world. Though this cannot be expected to be true at all times and places (the Solow model predicts no association in the long run), I have argued that since the global financial crisis foreign demand for exports from countries like the UK has been constrained. So our higher growth rate of labour explains our poor productivity performance, relative to countries which by one means or another control immigration. In other words, reducing immigration can raise both the level and growth rate of productivity, and so raise the level and growth rate of wages.