The income gap between London and the South East versus the rest of the UK is now larger than the gap between East and West Germany, a new paper from The Centre for Economic Policy Research (CEPR) has found.
Rapid Deindustrialisation in the north in the 1980s and 2000s has contributed to vast income disparities when compared with the capital, which has seen a take-off of growth since the 1980s, driven by finance and business services.
It has led to the UK becoming one of the most regionally unequal of the world’s industrialised economies in terms of GDP per capita, productivity, and disposable income.
This has come alongside rising regional inequalities in life expectancy and educational attainment, political instability and a ‘geography of discontent’.
The scale and persistence of these regional inequalities have generated a major national policy debate about how to ‘level up’ the UK’s lagging regions, a term that became a prominent strapline of Boris Johnson’s campaign in 2019.
According to the report’s authors Anna Stansbury, Dan Turner and Ed Balls, there are a number of ways in which future governments can achieve this.
They call for a boost in STEM degree-level skills, improving transport provision in major non-London conurbations; more public investment in R&D and innovation in clusters beyond the South East; and (alleviating housing supply and affordability constraints in greater London.
They also find some suggestive evidence to support a role for policy in boosting access to early-stage equity financing for high-growth-potential SMEs outside London and the South East.
Read the report in full here.
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