Revealed: How the North/South divide affects the UK economy

Politics

The North of England receives one of the lowest levels of investment among advanced economies, a think tank has said.

Greece would be the only OECD nation to see less public and private investment, if the region was a country, according to a new IPPR North report.

Researchers found the UK as a whole ranks 35th out of the 38 OECD countries in terms of receiving the least investment.

Slovakia, Poland and Hungary all enjoy more investment than the UK.

If the OECD average was applied to the UK for 2017 to 2020, £397bn more would have been invested.

The report said the UK and the North are being held back by “vast inequalities” and “systematic underinvestment” in research and development, social infrastructure and transport.

The extent of regional disparities is shown in the report, including how productivity is around £7 lower per hour worked in the North than the England average, while hourly pay is £1.60 lower than the rest of England.

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Northern mayors, Levelling Up Secretary Michael Gove and Labour’s shadow levelling up secretary Lisa Nandy are all set to attend Convention of the North today – a gathering of business, political and civic leaders from the region.

Political leaders in the region will argue that levelling up the North and South should be “hard wired” into UK law as they call for more long-term funding as opposed to the current competitive bidding system.

Ms Nandy will accuse the Conservatives of having “written off” areas that once fuelled the UK economy, while Mr Gove will say his government has over “the greatest transfer of power form Whitehall to local leaders across England in modern times”.

The Greek capital of Athens
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Only Greece has less investment than the North out of the OECD countries

Read more: Sunak denies favouring South with levelling up allocations

Marcus Johns, IPPR research fellow and report author, said: “Of all the advanced economies around the world, ours is the most regionally divided and getting worse – the North is at the sharp end of these divides and that’s a barrier to prosperity.

“But what’s even more unacceptable is that our country is divided by design. It is the result of decisions.

“The North’s strengths are national strengths. Northern prosperity can be national prosperity.

“It’s up to the government to unlock this potential, by acknowledging that it has to change, and by enabling empowered, well-resourced local government to coordinate and deliver long-term local visions for change.”

The report highlights other places in the world that were struggling but have turned their economies around, such as Leipzig in Germany, which is now the fastest-growing city in Europe thanks to industry and investment.

IPPR North director Zoe Billingham said: “The international evidence is clear – governments that let go of power and collaborate positively with local places can succeed in levelling up.

“Political leaders need to ‘zoom out’ and learn lessons from our international neighbours to achieve regional growth and narrow our aching divides. We know that private investment follows public investment.”

After announcing the latest recipients of the government’s levelling up fund last week, ministers faced accusations of favouring more affluent southeastern seats at the expense of deprived northern areas.

11 August 2022, Saxony, Leipzig: The moon rises behind the city center. Photo by: Sebastian Willnow/picture-alliance/dpa/AP Images
PIC:AP
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Leipzig was struggling but investment has seen its fortunes turned around. Pic: AP


A government spokesman said: “This report fundamentally misrepresents the clear steps we are taking to level up the region and we are committed to spreading opportunity across the whole of the UK, including the North of England.

“This includes investing £3.19bn through our levelling up funds for regeneration, transport and cultural projects and £3bn to transform local transport networks.

“The government has also helped secure inward investment, such as Credera in Manchester, Nissan in Sunderland and Equinor in the Port of Tyne, creating thousands of highly skilled jobs.

“We have also launched Freeports in Teeside, Liverpool City and the Humber to drive investment and signed new devolution deals in York and North Yorkshire and the North East, giving more powers to local leaders.”

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