During the Blair Years, the UK economy grew fastest among the G7 (the world’s seven largest industrialised economies) with incomes rising from the seventh to second highest within that group. Yet contained within that was a ludicrous imbalance – London and the South East, already more prosperous than the rest of the country by far and accounting for around 26% UK’s population, accounted for 37.3% of that growth.
It gets worse. From 2007-11, Office of National Statistics figures show it accounted for a whopping 47.8% of all of the increase in Gross Value Added in the UK – essentially a quarter of the population delivering half the growth.
During that period, the UK became a materially much poorer country, with national revenue falling in three years to 14% below projections at the start of the period (this is double the decline experienced by most of the G7). However, projections for the UK economy from 2013 are astonishingly good, with the country already growing faster than any other in the G7 and at twice the Eurozone rate. Small wonder George Osborne and Danny Alexander have a noticeable spring in their step, as the Coalition Government’s austerity drive appears to have paid dividends.
The risk remains, however, that this growth will be hideously imbalanced, focused as it seems to be on the finance sector (focused in Central London and Edinburgh) and State-backed construction primarily in England’s South East. Neither Labour nor Conservative-led governments have seen any need to do anything about this – focusing economic growth where people are used to private sector predominance (in the South East of England and Scotland, the only parts of the UK where private sector average salaries outstrip the public sector) and then spending the proceeds on high public spending where people have become used to that (everywhere else) in fact suits both parties when playing to their electorate.
This is not an excuse for inaction by the Northern Ireland Executive (or Welsh Assembly Government, for that matter), but a regional policy which effectively does nothing about the regional imbalance in economic growth does seriously hinder economic prospects broadly in the west of the UK. This is turn cannot be good in the long term for the country as a whole, as it leaves 30% of the population effectively subsidising the other 70%. Those odds are not good!
Of course, all G7 countries have similar issues – the United States’ growth centres on the North East, Texas and California; Canada’s on its Western provinces; Germany’s increasingly on its Southern states; France’s stubbornly on the Paris region; Italy’s most markedly of all on its northern cities. The issue is that if the UK could sort out a regional economic policy which also got its western seaboard functioning, it would be positioned highly competitively among major economies despite significant structural deficiencies (which, again, all countries have).
The UK’s numbers are encouraging not least because they will enhance consumer confidence which, in itself, will help businesses back on to their feet. However, a more balanced regional approach is necessary for the UK to reach anything like its potential and create jobs and wealth right across the country.