New transport projects will help, but a real fix requires more fundamental reformsby Paul Wallace / January 17, 2020 / Leave a comment
If there is one thing beyond Brexit that now fires up Boris Johnson it is the task of breathing new life into the economy of central and northern England, whose disenchanted voters gave him his landslide victory in December. But rebalancing the British economy away from London and the southeast is a monumental task, the more so since the prime minister’s hard version of Brexit will sharpen regional imbalances. The deeper one probes Britain’s widening north-south divide the more evident it is that there is no “oven-ready” simple solution.
Rising resentment of London in less favoured regions reflects the capital’s growing economic dominance. Over the past two decades London’s share of total UK output has risen by a fifth, from 20 per cent in 1998 to 24 per cent in 2018. No other of the UK’s 12 regions increased its share over that period. The biggest decline has been in the northeast, down by a tenth (from 3.2 to 2.9 per cent), followed by Yorkshire and the Humber.
Compared with five other big European countries, the UK stands out for its mix of one economically dominant region and several lagging ones. London is second only to the Île-de-France (essentially the greater Paris region) in output per worker, according to an analysis by national statistician Richard Prothero in 2018. But the UK also has eight of the 14 lowest-ranked regions out of 52 (the other six low-performers are in eastern Germany and southern Italy). Though the picture brightens a bit when disposable household incomes per person are compared, reflecting generally high employment rates in the UK, it still remains fairly dire.
Creating a more balanced national economy would be in everyone’s interests. Not only would it help the regions that have been lagging behind but also it would reduce congestion and overcrowding in London and the southeast. Johnson’s mission to “level up” regions, proclaimed the day after the election, makes economic sense for the country as a whole as well as serving the electoral self-interest of the Conservatives.
The main way in which the government plans to achieve that levelling-up is through a big boost to infrastructure in the left-behind regions. This is definitely worth a try. Research by the think-tank IPPR has documented the shortfall in public spending on…