Cultural Heritage and the Creative Economy
Part of the Heritage Counts series. 6 minute read.
Heritage, whether tangible, intangible or digital, serves as inspiration for new creative works and innovation that can increase entrepreneurship and foster local economic growth.
Looking at data from 2022, we can see how cultural activity contributes to the national economy, for example, the UK’s creative industries generated £126 billion in Gross Value Added (GVA). This is 12% above pre‑pandemic levels in real terms. It also employed 2.4 million people (within the cultural sector, e.g. museums, galleries and historic sites), contributing £34 billion (House of Lords Library, 2024).
This article shows how the presence of heritage represents a specific type of economic resource that can stimulate imagination and innovative capacity to produce positive economic outcomes.
Cities need old buildings so badly it is probably impossible for vigorous streets and districts to grow without them…. for really new ideas of any kind—no matter how ultimately profitable or otherwise successful some of them might prove to be—there is no leeway for such chancy trial, error and experimentation in the high-overhead economy of new construction. Old ideas can sometimes use new buildings. New ideas must use old buildings.
Heritage sparks creativity and economic development
Research demonstrates that our shared heritage can inspire curiosity, imagination, critical thinking and new perspectives. This enhances people’s innovative capacity and capability; leading to greater productivity and economic growth.
- Research by Cerisola (2024) examines how cultural heritage influences creativity and economic performance in England. The study uses econometric analysis of NUTS3 regions, drawing on measures of heritage density, trademark activity and creative talent. The study finds:
- Areas with abundant cultural heritage tend to perform better economically.
- A marginal increase in cultural heritage is associated with an average 0.14% rise in real GDP.
- Areas with a higher density of listed buildings generate more trademarks per 1,000 people, a proxy for economic creativity.
- Regions that combine a density of heritage assets with both scientific and economic or scientific and artistic creative talent demonstrate the strongest economic performance.
Source: Cerisola, S. (2024)
- Earlier research by Cerisola (2019) also investigates the effect of cultural heritage on different forms of creativity and on economic development. Using a structural equation model for two periods (2001–2004 and 2011–2014) across Italian NUTS3 provinces (206 observations), the study finds:
- Cultural heritage is a source of inspiration and a strong determinant of creativity. Creativity, defined as new ideas based on diverse talents, can be artistic, scientific, or economic in nature
- The statistical analysis demonstrates that cultural heritage has a positive, significant effect on artistic creativity and a smaller but still positive impact on scientific creativity. It has no significant impact on economic creativity
The relationship between cultural heritage, creativity and economic development is summarised in the diagram below.
If we take a closer look at one region, evidence from the West Midlands shows that cultural and creative sectors generate higher GVA than several other traditional industries, including construction and life sciences. The heritage sector alone in this region, contributes £1.2 billion in direct GVA and a further £559 million indirectly (West Midlands Combined Authority, 2021).
Creative industries concentrate in areas with high heritage density
Historic buildings offer flexible, distinctive, and characterful workspaces that attract businesses to local areas. Research indicates that heritage workspaces can uniquely spark curiosity, exploratory thinking, and imaginative ideas. From this foundation, creativity, invention and innovation can emerge supporting and growing local creative industries.
- A recent report commissioned by Historic England (GC Insight and Here for Culture and Place, 2024) mapped over 100,000 creative businesses across the North of England and found that creative micro-clusters tended to form in historic town and city centres, particularly around listed buildings and in conservation areas. Using the growth flag method, the study also identified that areas with a strong historic environment were more likely to host firms classified as having high growth potential, underpinning the role of heritage settings in supporting creative business development.
- Graves et al (2017) found that a 1-unit increase in the density of heritage assets (within a local authority area) led to 0.04-unit increase in the concentration of creative industries. The researchers also found that prior local-level investments into culture, heritage, and sports (1 and 2 years prior to the time period in question) were associated with an increase in the relative concentration of creative firms in the area
- The Culture as Growth report (Creative UK, 2025) highlights the strong spatial concentration of creative firms within heritage-rich areas. Drawing on research by Colliers International, it finds that nearly 26% of UK creative firms are located within conservation areas, despite these areas covering only around 2% of the country’s land area.
- This disproportionate clustering suggests that historic environments provide distinctive, characterful settings that attract and retain creative businesses. The report characterises such heritage-rich areas as “sticky” creative ecosystems, anchoring firms within place and supporting local creative economies through spatial concentration and agglomeration effects
- The National Lottery Heritage Fund (2013) found creative and cultural industries are more likely to operate out of a listed building than in a non-listed building in England. This difference is particularly pronounced in England’s core cities. These findings support the premise that innovation and new products/services flourish best in cities with abundant historic, distinctive buildings (Jacobs, 1993)
- The same study also showed that commercial businesses based in listed buildings generated, on average, around £308,000 in GVA per year - approximately 4.4% higher than the national average for commercial firms. In addition, 69% of surveyed occupiers reported that operating from a historic building helped project a positive and distinctive image to clients.
- Only 7% of 155 European cities in 2019 with circular economy plans explicitly mentioned cultural heritage. The lack of emphasis on cultural heritage in European cities, including UK cities like London, represents a missed opportunity to support the creative economy (Foster and Saleh, 2021)
Heritage and cultural assets attract creative workers and support local economies
Research demonstrates that cultural heritage and creative industries have a mutually beneficial relationship in attracting creative workers and businesses.
- Recent analysis by the Creative Industries Policy and Evidence Centre (O’Brien, D., et al., 2025) identifies a strong spatial relationship between cultural engagement and employment in arts, culture and heritage occupations. Using local authority-level scatterplot analysis, the study finds that “areas with higher rates of engagement with arts, culture and heritage also tended to be the ones with higher proportions of workers in arts, culture and heritage occupations”. While correlation does not imply causation, the findings highlight the importance of place-based cultural ecosystems in supporting creative labour markets.
- The report also shows that these engagement levels vary significantly across local authorities, with some areas exhibiting very high participation and others substantially lower rates This uneven distribution reflects wider geographic inequalities in cultural infrastructure and funding. As a result, while heritage and cultural assets can anchor local creative growth, their economic benefits are not evenly spread across places. Addressing these spatial disparities is therefore central to unlocking the full potential of the creative economy.
- Research by Cerisola and Panzera (2021) sought to determine the effect of cultural vibrancy, cultural heritage and the local creative economy on other economic outputs. The study found that cultural heritage and creativity are linked together and to development, especially at the territorial level
- The mere presence of cultural heritage and cultural facilities is not enough to trigger a spillover mechanism that significantly impacts regional output. Rather, it is the “activation” of material cultural heritage through participation that generates a positive effect on the regional economy
- The authors conclude that heritage, both built and natural, is a driving factor for both social cohesion and profitable long-lasting development
- Backman and Nilsson (2018) provide evidence that a 1-unit growth in heritage sites per capita induces an increase of approximately 50 more highly educated people in the short term (2001 to 2006) and 80 in the long term (2001 to 2010)
- Kourtit and Nijkamp (2018) demonstrate that heritage and cultural assets are a pull factor for creative actors (individuals), especially in the arts sector, because of their inspiring effect. The research is based on cross-sectional regression analysis of 370 observations in Dutch municipalities in the period 1994 to 2009
In the Journal of Regional Studies, Kourtit and Nijkam (2018) define creative actors as creative businesses and creative workers. They argue that the synergetic relationship between the following factors attracts creative actors into an area:
- Heritage and cultural assets - cultural and heritage assets attract creative actors because of their inspiring effect
- Urban size and scale are accompanied by the accumulation of social capital and by larger employment opportunities
- Urban agglomeration and externalities - cultural and creative sectors benefit from proximity because it enables them to access highly talented workers and suppliers. Economies of scale in urban agglomerations also reduce costs
The synergetic interrelationship between these 3 factors leads to what the authors call the configuration for a creative-cultural complex.
Kourtit and Nijkamp (2018) applied an ordinary least square regression analysis to 370 observations in Dutch municipalities in 1994 to 2009. The research demonstrates that heritage and cultural assets are a pull factor for creative actors, especially in the arts sector.
Case study: The Observer Building, Hastings
The Observer Building in Hastings sits within the Hastings High Street Heritage Action Zone, a £3 million regeneration programme that has been funded by Historic England since 2019. The programme aims to enhance the high street, or the Trinity Triangle, by re-using historic buildings to stimulate the local creative economy. The Observer Building, originally built in 1924 as the home for production of local news, has been abandoned and unoccupied since 1985. Thanks in part to High Street Heritage Action Zone funding, it was able to reopen, breathing new life into the local area. Now, the Observer Building is home to over 60 jobs often specialising in creative industries and containing a creative tech hub. The restored Observer Building is helping to support and grow Hastings' creative economy. Key facts and figures demonstrating this include:
- Over £6.7 million of investment leveraged, including £3 million from the Heritage Action Zone grant
- 64 co-working workspaces and a historic board room restored for meetings and events
- 94% of tenants in the Observer Buildings report being ‘in good company’ offering opportunities for collaboration
- Creative tech hub capable of hosting 40+ bespoke events, talks and other activities
- Creative technology workshops engaging vulnerable youth in creative skills development
- Creative technology talks on AI and the arts
- LIDAR 3D scanning tech and 2 3D printers
- Bringing over 2,100 square meters of vacant commercial space back into use across the whole of the High Street Heritage Action zone
References
- Backman, M. and Nilsson, P. (2018) ‘The Role of Cultural Heritage in Attracting Skilled Individuals’. Available at: https://doi.org/10.1007/s10824-016-9289-2 (Accessed: 05.10.23)
- Cerisola, S. (2019) ‘A new perspective on the cultural heritage–development nexus: the role of creativity’. Available at: https://doi.org/10.1007/s10824-018-9328-2 (Accessed: 30.10.23)
- Cerisola, S. (2024) 'Multidimensional creativity as a mediator between cultural heritage and regional economic development in England'. Available at: https://historicengland.org.uk/content/docs/research/cultural-heritage-development-through-creativity/ (Accessed: 16.08.24)
- Cerisola, S. and Panzera, E. (2021) ‘Cultural and Creative Cities and Regional Economic Efficiency: Context Conditions as Catalyzers of Cultural Vibrancy and Creative Economy’. Sustainability, 13(13), pp.7150–7150. Available at: https://doi.org/10.3390/su13137150. (Accessed: 10.10.23)
- Creative UK (2025) Culture as Growth. Available at: https://report.wearecreative.uk/culture-as-growth#hs_cos_wrapper_widget_1740656528007_ (Accessed: 13.02.26).
- Foster, G. and Saleh, R. (2021) ‘The Adaptive Reuse of Cultural Heritage in European Circular City Plans: A Systematic Review’. Available at: https://doi.org/10.3390/su13052889 (Accessed: 12.10.23)
- GC Insight Ltd. (2024) ‘Creative Clusters Analysis’. Available at:
https://historicengland.org.uk/research/results/reports/83-2024/ (Accessed: 21.11.25). - Graves, A., Rowell, A., Vardakoulias, O., Arnold, S. and Evans, G. (2017) ‘The role of culture, sport and heritage in place shaping’. Available at: https://www.gov.uk/government/publications/the-role-of-culture-sport-and-heritage-in-place-shaping (Accessed: 21.09.23)
- House of Lords Library (2024) Contribution of the arts to society and the economy. Available at: https://lordslibrary.parliament.uk/contribution-of-the-arts-to-society-and-the-economy/ (Accessed: 13.02.26).
- Jacobs, J. (1993) ‘The death and life of great American cities’. Vintage Books. New York: Random House
- Kourtit, K. and Nijkamp, P. (2018) ‘Creative actors and historical–cultural assets in urban regions’. Available at: https://doi.org/10.1080/00343404.2018.1541077 (Accessed: 03.10.23)
- O’Brien, D., Taylor, M. and Wang, R. (2025) Arts, Culture and Heritage: Recent Trends in UK Workforce and Engagement in England. Creative Industries Policy and Evidence Centre (Creative PEC), State of the Nations series. Available at: https://pec.ac.uk/wp-content/uploads/2025/05/Creative-PEC-Arts-culture-and-heritage-Recent-trends-in-UK-workforce-and-engagement-in-England-06-05-2025.pdf (Accessed: 13.02.26).
- Rizzo, I. and Throsby, D. (2006) ‘Chapter 28 Cultural Heritage: Economic Analysis and Public Policy’. Handbook of the economics of art and culture, pp.983–1016. Available at: https://doi.org/10.1016/S1574-0676(06)01028-3 (Accessed: 28.10.23)
- The National Lottery Heritage Fund. (2013) ‘New ideas need old buildings’. Available at: https://www.heritagefund.org.uk/about/insight/research/new-ideas-need-old-buildings (Accessed: 25.10.23]
- Throsby, D. (1999) ‘Cultural Capital’. Available at: https://doi.org/10.1023/A:1007543313370 (Accessed: 20.10.23)
- West Midlands Combined Authority (2021) West Midlands Culture and Economy. Available at: https://www.wmca.org.uk/documents/culture-digital/west-midlands-culture-and-economy/west-midlands-culture-and-economy/ (Accessed: 13.02.26)
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