George Osborne is in Manchester today. This morning he gave a speech at the city’s Museum of Science and Industry in which he argued that Britain needs a “Northern powerhouse” as a counterweight to London, which, as we all know, sucks money and talent inexorably southwards. It wasn’t a single city he was talking about—not even Manchester itself, which, as I show in a piece in the latest of issue of Prospect, grew quicker than anywhere outside London and the south-east in the decade leading up to the recession—”but a collection of northern cities sufficiently close to each other that combined they can take on the world.”
Osborne has clearly been reading the abundant academic literature which shows that cities and conurbations are the engines of economic prosperity. His speech even contains a reference to “agglomeration effects,” a jargon term that economists use to refer to the advantages that come from the physical proximity of firms, workers and consumers. What Osborne has in mind is not some utopian political scheme in which Liverpool, Manchester, Sheffield, Leeds and maybe Hull would be merged in one vast political entity, but a single economic area with the infrastructure to match.