Feb 20th, 2023
The UK interregional productivity inequalities are nowadays widely recognised as posing some of the greatest challenges to our economy, society, and governance systems. However, attention to, and concern about, these regional development issues is a very recent phenomenon in the UK. The nature and consequences of the UK’s economic geography for its national economic performance were barely considered in mainstream economic thinking until very recently, reflecting the fact that as a polity, the UK and its institutions have, until just a few years ago, largely failed to consider the UK as having a serious regional problem.
Even now, most economic policymakers and institutions at the very highest levels are belatedly struggling to comprehend the scale and complexities of the challenges ahead. Moreover, the role that UK-specific governance and institutional issues may have played in exacerbating the regional problem have also been largely outside of the narratives and debates in mainstream UK economics. Prior to the EU Referendum shocks of 2016, very few economists understood the scale of the problem (McCann, 2016), and it is only the political shocks associated with Brexit that have placed these issues centre-stage in UK policy and political debates. Unfortunately, in the meanwhile, this has allowed non-economic narratives, sometimes with little or no real substance, to flourish and drive the political economy of levelling up and devolution. For the sake of future good policy and institutions, UK economics must seriously engage with the regional question.
The rest of this commentary is organised as follows. The next section explains the nature and scale of the UK’s regional economic inequality problem in the context of being a national growth problem. The third section explains how thinking about UK regional economic problems has, for a long time, been heavily shaped by various economic narratives emerging particularly from the United States (US), which have somewhat skewed UK policy-thinking away from the central challenges that the UK faces. This has left open the possibility for non-economic narratives to drive political debates in this arena – and, as the fourth section explains, this is precisely what has taken place in the UK. The fifth section focuses on the devolution-related governance reforms that the UK needs to undertake in order to begin to address the regional imbalances, while the sixth section briefly outlines the UK’s inbuilt institutional pressures, which will aim to stymie any devolution-related governance changes.
Published in IFS Deaton Review of Inequalities, February 2023
Author Philip McCann (The University of Manchester)