Britain is playing Jenga with its economy

Britain needs to change its unhealthy dependence on London and promote economic growth outside the capital. It should really build a Northern powerhouse.

The Industrial Revolution was one of the most prosperous times in British history. Profiting from advances in science and technology, Britain developed into the economic centre of the world.

What I like most about the Industrial Revolution is that Britain’s prosperity at the time was a team effort.

You had the booming textile industry in the North West with Manchester, or ‘Cottonopolis’, at its heart. Go a bit down and you’d land in the Black Country – the part of the West Midlands with a thriving metal sector.

Liverpool’s harbour benefited from its proximity to Manchester. The ports of Newcastle, Sunderland and Bristol flourished as the North East and South West emerged as Britain’s shipbuilding capitals.

And there was, of course, eternal London.

With different regions responsible for Britain’s boom, the country’s economy was solid as a rock.

Fast-forward two hundred years and all that is left is, well, London.

Sure, Britain is still the world’s fifth economy in terms of GDP. But GDP is deceiving. It’s a number in a vacuum that doesn’t tell the whole story.

The UK economy heavily relies on London. Right now, London’s figures camouflage the problems that exist beyond the capital. How long can it keep that up?

London-centric universe

Even if London could carry the whole UK economy on its own, it’s still an extremely unhealthy situation to be in. Why would you put all your eggs in one basket?

Britain’s reliance on the City makes its economy more vulnerable to global shocks. If London stagnates, there’s no other region that can make up for it.

Even when London is booming, there’s little to no spill-over effect to the rest of the island. The north in particular suffers from current economic policies.

A research report published earlier this week by the Joseph Rowntree Foundation (JRF) found that 10 of the 12 most struggling cities in the UK are in Northern England.

Most of these towns are close to the core cities of the Conservative government’s so-called ‘Northern Powerhouse’ – Manchester, Liverpool, Leeds, and Newcastle. It’s telling that no place in the south even shows up in the top 24 of cities in decline.

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The economies of northern cities are undergoing a metamorphosis. They’re still in the process of replacing jobs in factories and pits to employment in the service sector. But these cities cannot thrive without a little help.

Not only are they not getting any help, they’re also severely hindered. In Britain’s London-centric universe, the capital is sucking the life out of every other place.

London is brain draining other regions. Many young people who might have stayed in their home town feel they have no choice but to seek fortune in the capital.

Why is that?

It’s because London is basically the only place where new jobs are created.

In 2014 think tank Centre for Cities warned that 80% of new private sector jobs had been created in London. In the public sector, for every new job in London two were lost in other cities.

It was the same story in 2015 and judging from this week’s JRF study it appears the government has, again, done nothing to counter this trend.

The government enjoys virtually no support in northern cities like Manchester, Liverpool, Leeds, Sheffield and Newcastle. From the looks of it, it’s not even trying to change that.

Closing the gap

So it’s clear that Britain needs to create growth in places other than London. It has to build a more solid economic base, spread over different regions.

But where to begin?

Well, you could start with infrastructure. Transport connections between Liverpool, Manchester and Leeds are below par. Connectivity in and between northern cities need to improve to attract more business, and therefore jobs, to the north.

The London School of Economics estimates a 20-minute reduction in travel time in the north of England could add up to £6.7 billion to the economy. What is George Osborne waiting for?

Infrastructure is of course only part of the solution. The JRF study writes that education needs to shape up to improve the quality of the workforce while northern cities would benefit from devolution.

Westminster should untie the hands of local authorities, so to speak, as they’re in a better position to cater to the specific needs of their towns.

Most of all, “to achieve its potential, the ‘Northern Powerhouse’ needs an economic strategy that addresses the needs of underperforming cities across the north of England.”

Maybe I missed that memo but I haven’t heard a government strategy about how it intends to improve the northern economy. All I’ve heard are sound bites and a name for the project that by now almost sounds ironic.

You can have a brilliant title for a book but it’s useless when you don’t follow through and actually write the bloody thing.

Britain’s economic recovery, if that term even applies, is an unhealthy one. It relies almost exclusively on the South East while the north-south divide is growing bigger and bigger.

The country is playing Jenga with its economy and it’s built the whole tower on a single wooden block. More blocks need to be added to the base to make the tower more stable.

If not, then it’s just a matter of time before the whole thing comes tumbling down.

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