Preston, the Lancastrian city labelled as a poster child for “Corbynomics,” has been named as the most rapidly improving urban area in the UK to live and work.

Research carried out by the accountancy firm PricewaterhouseCoopers and the thinktank Demos, which used a range of measures including employment, workers’ pay, house prices, transport, the environment, work-life-balance and inequality to rank 42 UK cities, found that Preston had improved the most in its 2018 Good Growth for Cities index.

It said the city was better to live in than London on the index, which attempts to assess the quality of life in cities across Britain beyond traditional economic measures such as gross domestic product.

Preston has experienced a large reduction in its unemployment rate, down to 3.1% last year compared with 6.5% in 2014, while it has also seen improvements above the national average for health, transport, the work-life balance of its residents, and for the skills among both the youth and adult populations.

The city in recent years has gained national attention for the way its Labour-run council has adopted an ultra-localist approach to economic policy. In an attempt to revitalise the local economy following the last recession, it attempted to encourage “anchor institutions” – such as the council, police, colleges and the university – to buy the goods and services they need from local businesses wherever possible.

Although this predated the election of Jeremy Corbyn as Labour leader, the lessons from the city have become central to the party’s economic thinking. It featured in a pamphlet on alternative models of ownership commissioned by John McDonnell, the shadow chancellor, and has been described by the Economist magazine as the “poster child of Corbynomics”.

Although the PwC and Demos report did not refer to the council’s localist economic policy as one of the reasons for the city’s recent revival, it may have helped it to rise up the rankings.

Jonathan House, an author of the report at PwC, said: “It’s definitely a combination of the public and local private sector, providing the context for this good growth to take place. Some of the policy and business decisions have led to this improvement.”

Matthew Brown, the leader of Preston city council, said the improvement in the ranking showed the success of “practical policies to build wealth for the whole community collaboratively with a number of partners”.

He added: “We are proud to receive national recognition for the improvement in these areas that has been made in the city in the last 12 months.”

Preston ranked 14th in the best cities list, ahead of London in 15th, with the capital held back by high housing and transport costs and higher inequality. Oxford maintained its ranking from last year as the best place to live and work in Britain.

The top 10 improvers in the 2018 index also include Middlesbrough and Stockton, Hull, Milton Keynes, Birmingham and Wakefield and Castleford.

The report said much of these gains reflected the ripple effect in the economy of jobs increasingly being created outside London and south-east England, after these parts of the country recovered first from the financial crisis.

Top 10 ranking cities

1. Oxford

2. Reading

3. Southampton

4. Milton Keynes

5. Bristol

6. Edinburgh

7. Swindon

8. Coventry

9. Aberdeen

10. Leicester

Top 10 most improved cities

1. Preston

2. Middlesbrough and Stockton

3. Hull

4. Milton Keynes

5. Birmingham

6. Wakefield and Castleford

7. Aberdeen

8. Liverpool

9. Swindon

10. Manchester