The dangers of ignoring this recession's bitter regional edge

The north of England and many of the other English regions are enduring a daily squeeze that is seld

As we all know, northerners are made of stern stuff and historically have seized any opportunities thrown their way. Nonetheless, with regards to recent economic trends north of The Wash, we all have ample cause to feel miserable.

Consider recent form: that the north-east and Yorkshire and Humber were the top regions in the country for increases in unemployment in the last quarter. Unemployment in the whole north now stands at 9.45 per cent (compared to a national average of 8.2 per cent) a rate the north has not had to endure since 1995. Manufacturing, a sector with more clout in the north of England than the rest of the UK, shrank by 0.6 per cent in from June to August. Worse, recent business surveys suggest that while the private sector in the north is recovering from a difficult business environment over the summer, the flow of new orders coming in to northern businesses looks precarious.

The north of England and many of the other English regions are, day in day out, enduring a daily squeeze that is seldom acknowledged. Whitehall's apparent ill-regard to northern concerns was exemplified by last week's public sector unemployment figures. Latest research shows that in one year, 121,000 public sector jobs have been lost up north while 32,000 have been gained down south. This sits uneasily with the government's apparent aim to make cuts as "fair" as possible. As the accountancy firm Begbies Traynor reported recently, companies in the north-east, north-west and Yorkshire are being hit hardest by public sector retrenchment, with many small and medium sized enterprises disproportionately squeezed. Likewise, large companies like Boots have noted the stark impact cuts are having on their sales and consumer confidence in the north. We expect the labour market numbers, issued this Thursday, to reaffirm this glum picture.

Were it needed, this is all yet further proof that this great recession has a bitter regional edge. Through recent events in Europe, we have seen how one country's economic situation and performance can drastically differ from others. So it is in the English regions. Without a greater focus on spatial rebalancing and the significant decentralisation of central government functions away from Whitehall, both employment and demographic patterns are unlikely to shift. This matters to everyone: recent research from the OECD confirms that it is in a country's "lagging" regions (which make up 56 per cent of UK output) that the economic future lies. We must get growth in these regions in order to achieve growth and prosperity nationally. Positive growth figures in the north-west and Yorkshire in recent days are to be welcomed, but overall, there is still much with which to be greatly concerned.

Though we talk of a "UK economy" it is, largely, a falsehood. We need a more a nuanced understanding in our discourse as to how this great calamity is affecting the ordinary lives of those outside the greater south-east. Many of the wider iniquities that exist are seldom discussed. We in the north want to get out of this hole ourselves. To that end, IPPR North's Northern Economic Futures Commission is currently considering a wide array of proposals to kick start northern growth and make the north one of UK PLC's great success stories. But so long as we approach England and Britain as one economic bloc, with one set of economic priorities, we can never succeed -- it's time for Whitehall to recognise that.

Lewis Goodall is Researcher at IPPR North

 

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.