The politics of the quarterly growth figures underpin a narrative that either says "things are getting better, "we were right", or "things are getting worse, you were wrong", depending on whether you’re George Osborne of Ed Balls. So this morning’s announcement that growth in the last quarter of 2013 was 0.7 per cent - with growth estimated at 1.9 per cent overall last year - allows the Chancellor to crow that there is "more evidence that our long-term economic plan is working."
But this is an aggregated national figure which disguises what is happening around the country. We only have to look at Monday’s report from the Centre for Cities think tank to see that not every part of the UK is jumping for joy. It exposes a massive, jaw-dropping imbalance in the economy, with London accounting for four out of every five jobs created in the private sector from 2010-12.
So rather than hyperbole over a national growth figure, we instead need regionalised figures to show how prosperity is unevenly spread. And we need the debate about the economy refocused around how we narrow these fluctuations. Instead of London and the south east booming and parts of the rest of the country being left in the deep freeze, we need to see London’s over-heated economy cooled and our regional economies thawed.
This is essential if One Nation politics is to mean anything. London is buoyed on a sea of public cash, with everything from civil service jobs through to public transport subsidies locking-in massive regional economic inequalities. The Centre for Cities report shows that not only is London dominating private sector jobs growth, but public sector employment too. While Birmingham lost 9,300 public sector jobs between 2010-12, London actually gained 66,300.
These advantages need to levelled-out to spread wealth and opportunity further, helping the national economy work better and become less reliant on London, but also making London’s economy more rational in the process. Indeed, with house prices in the capital now soaring, ordinary Londoners would benefit from some economic rebalancing. In the 12 months to November 2012, London’s property prices rose, on average, by 11.6 per cent. In contrast, they rose by just 0.6 per cent in the north west.
We did have regional economic strategies in place until this government scrapped the regional development agencies in 2010. This time, however, the task of narrowing economic disparities needs to sit at the heart of Treasury policy-making. Every lever of policy should be looking to release opportunity across the UK, utilising underused capacity across the country and spreading prosperity, particularly in terms of private sector investment, as widely as possible.
Rather than government and opposition pouncing on quarterly growth figures as evidence for their conflicting accounts of the state of the economy, it would be far better to have a regionalised breakdown so that we can start to have an honest, evidence-based discussion about the state of the real economy.