Mayors go global: delivering growth through diplomacy
JACK SHAW AND HUW SPENCER
In October 2024, the Council of the Nations and Regions met for the first time. The body was established by the UK Government to encourage collaboration between the Devolved Administrations of Wales, Scotland and Northern Ireland and England’s mayoralties. The meeting was symbolic: underlining the significance of national and sub-national actors in the Government’s mission to revive economic growth UK-wide – which has been sluggish for more than a decade. The mayor of West Yorkshire, Tracy Brabin, was unable to attend. And the reason for her absence speaks to the increasingly important role of England’s mayors – and the cities and towns they represent – in the global economy. Brabin was on a trade mission to Tennessee in the United States.
The idea of sub-national diplomacy is not a new phenomenon. Local authorities have been engaging in ‘municipal statecraft’ across Europe, the US, China, South Korea and India for decades. Regional Development Agencies flexed their diplomatic muscles long before strategic authorities were established, with financial support from the Department for Business and Trade. Though their focus has overwhelmingly been on domestic policy, the first tranche of mayors were originally conceived by then Chancellor George Osborne to represent their areas on the international stage.
Yet as England’s dozen mayors take on more responsibility for the economic performance of their sub-regions, it is unsurprising that trade and investment should take up more space in their in-trays. Despite the slow start, strategic authorities are embracing their soft power and using it to build on their competitive advantages – especially in the context of their renewed role in taking forward the Government’s industrial strategy. Strategic authorities have looked internationally by hosting large-scale events, such as the Commonwealth Games in Birmingham, or by building capacity and capability to market their sub-regions, such as through the establishment of place-based promotion agencies. The mayors of Greater Manchester and the Liverpool City Region, Andy Burnham and Steve Rotherham, played a leading role in the UK’s first ever joint mayoral mission as part of a visit to Ireland. The city-regions share a close commercial relationship with Ireland and exported nearly £2 billion worth of goods to the country in 2019. As well as trips to the US, Brabin recently visited India and struck an agreement with global technology firm Mphasis to employ 1,000 more staff on its Leeds site. And Burnham struck a “cooperation agreement” with North-Rhine Westphalia to improve trade with the German region and even appointed a former member of his Mayor’s Business Advisory Panel as his Special Advisor for Germany. Rotherham put the raison d’être of these missions most succinctly when he described a trade mission to New York, Massachusetts and Boston in October 2024 as an “important and necessary investment” in the “future prosperity” of both Liverpool and UK plc.
In recent weeks, the Government has demonstrated its seriousness towards attracting international investment. In the Devolution White Paper it was announced that the Office for Investment will collaborate with mayors to “develop and market” investment proposals. A long overdue assessment of the Mayor of London’s responsibilities will be undertaken, with a view of building on London’s international competitiveness. At the same time, the Foreign, Commonwealth and Development Office has launched a Soft Power Council and a review into economic diplomacy. Led by Sir Martin Donnelly, the review will consider how to put employment and growth “at the heart of our foreign policy” and the strategic context shaping Whitehall’s engagement on economic diplomacy. These developments offer a fresh opportunity to consider the role of mayors in the Government’s diplomatic activities, not least because one of the strategic contexts that emerged at the end of the twentieth century in Europe and the United States is what political theorist Benjamin Barber describes as the “rise of the Mayor”.
The economic rationale for sub-national diplomacy in the UK is well established. England’s cities are notably less productive than their European counterparts. Increasing the number of export-oriented firms in a city through targeted business support or trade missions is a well-documented route to improving productivity. Previous research by The Productivity Institute has set out how Foreign Direct Investment can drive up productivity – particularly in ‘left behind’ regions – if it leads to knowledge or technology ‘spillovers’ into neighbouring companies. And the Harrington Review, which reported in 2023, recommended that more action be taken to build on the support available to strategic authorities to enable them to develop place-specific investment opportunities. Investors that spoke to Lord Harrington noted that the establishment of strategic authorities had helped attract investment outside of London and the South East.
Moving at speed is important. The role of sub-national leaders outside of the UK in attracting trade and investment has become more prolific and systematised – making attempts to attract international investment by cities more competitive. In the US, sub-national diplomacy emerged as a plank of the Biden administration, though it has not received the same attention in the UK as other policy prescriptions such as the Inflation Reduction Act. Described as a “foreign policy for the middle class” by Biden’s National Security Advisor, Jake Sullivan, sub-national diplomacy was cited as a new “organising principle” which involved the US reconceiving its role on the international stage in order to promote economic renewal at home. Importantly, Sullivan outlined that this pursuit would be measured by a metric more tangible than growth in the abstract: is it going to make life better, safer, and easier for working families? Consequently, the Subnational Diplomacy Unit was established in the US State Department in 2021 charged with, in part, supporting state and local actors to play a more influential role in building economic relationships. It’s not clear whether this approach will continue under the Trump administration, but UK-US cooperation between cities on industrial policy, trade and growth remains essential to tackling populism in the ‘geographies of discontent’ both across the US ‘rustbelt’ and ‘left behind’ places in England. And as the Truman Center has set out, sub-national also diplomacy embeds stability and durability into the fabric of the United States’ international partnerships. As demonstrated by Greater Manchester’s relationship with North Carolina and Texas, South Yorkshire’s relationship with New York, Liverpool’s relationship with Massachusetts and West Yorkshire’s relationship with Tennessee, ‘special relationships’ can endure sub-regionally.
Although the Council of the Nations and Regions is a promising start, the architecture necessary to maximise the opportunity that high-profile mayors now represent has not been fully grasped. Mayors are not adequately integrated within the trade missions led by the UK Government. Historically there has been limited strategic direction from central government on how strategic authorities should approach attracting productivity-enhancing international investment. There is little resource dedicated to diplomacy within strategic authorities – or at least in comparison with international counterparts. A recent survey by Connected Cities Lab into how cities structure their international engagement revealed that 88 per cent of cities have dedicated offices within their organisations responsible for attracting international investment. And more broadly, national and sub-national activities have often taken place without the explicit coordination or integration: strategic authorities could do more to share their local economic intelligence, while the Government could do more to support strategic authorities with their international reach and capacity to deliver at scale.
There are early signs that the role of strategic authorities in sub-national diplomacy may be codified, with Greater Manchester and the West Midlands’ Trailblazer settlements negotiated by the previous government including a commitment from the Department for Business and Trade and Department for Science, Innovation and Technology to establish a new unit to identify, map and support clusters, as well as creating a new Trade and Investment Board and giving them scope to shape the mandate of Free Trade Agreements in the future.
Despite these opportunities, the Government will also need to be mindful of the risks that sub-national diplomacy presents. MI5 raised concerns in 2022 about malicious Chinese actors engaging with sub-national leaders in England to gain influence. And that threat is real: a former staff member for the New York state government is accused of being an agent of the Chinese government. Australia has expressed similar concerns, passing the Foreign Relations (State and Territory Arrangements) Bill in 2020 that enables it to veto cities’ diplomatic efforts on national security grounds. And though it hasn’t come to fruition in England, the Mayor of Tees Valley has mooted tax competition, which runs the risk of English regions competing with one another for international investment.
These developments raise pertinent questions. With mayors acting as agents of economic growth in their sub-regions, should they be further empowered to attract more international investment and, if so, how? Does public opinion preclude strategic authorities from travelling overseas more frequently for this purpose? Given the growing disparity in sub-national capabilities, should the Government do more to nurture and facilitate trade missions with and for strategic authorities? And given cities are competing with each other to attract investment, how can they avoid damaging races-to-the-bottom that risk harming the potential of the UK economy as English devolution is further embedded? The Productivity Institute will publish a working paper that seeks to address these questions this spring.
Jack Shaw is a Policy Fellow at the University of Manchester’s Productivity Institute and an Affiliate Researcher at the Bennett Institute for Public Policy, University of Cambridge.
Huw Spencer is a Policy Fellow at the University of Manchester’s Productivity Institute and a Research Associate at the Harvard Kennedy School.