Concentration of wealth leaves many UK regions lagging behind
EUROSTAT, THE STATISTICAL OFFICE of the EU has recently published their annual report on the relative wealth of the various sub-regions of Europe in 2010 (see http://bit.ly/111TqWK) and it makes fascinating reading. In their report they split the UK into 37 regions and demonstrate the huge imbalance between the completely dominant financial and corporate headquarters sector of London, and the struggling economy of the rest of the country.
Eurostat measured the GDP per head of inner London at 328% of the European average. And if you look for the UK’s poorest region you’ll find that in west Wales, GDP per head is 70% of the European average, and in Cornwall it is 72%. No other European nation has anywhere remotely close to the disparity displayed by the 258% difference between these extremes. Everybody knows that wealth in France is concentrated in Paris, but its capital region is only twice as rich as the poorest one, not 4.7 times richer, as it is in the UK.
Actually, even if we take the UK’s second wealthiest region, the oil-rich North East of Scotland at GDP per head of 162% of the EU average, the disparity with west Wales is still a larger gap than in any other European nation.
So the UK, particularly England and Wales, has extraordinary extremes of wealth. Outside London and the South of England it is actually quite a poor country. With the exception of Cheshire, every single region of the north of England and the West Midlands, all of Wales and the whole of Northern Ireland have a lower GDP per head than the European average.
Writer John Lanchester has pointed out that to get to a similar level of dominance that London has relative to its national economy in the United States you would have to add New York, Los Angeles, Boston, Chicago, Miami and keep going until you include every one of the top 30 metropolitan areas.
So the rest of the UK - outside Scotland - is really two completely separate economies. The hugely successful London and the South East; and the rest.
In fact, Scotland is economically much more typical of a European economy than England. Most of Scotland is roughly as wealthy as the EU average - the only significantly poorer region is the very rural Highlands and Islands at 87% of EU GDP/head.
And the region which contains the capital city is not actually the richest one – a fact it shares with Germany, Netherlands, Spain and Italy. Wealth is much more evenly spread.
Sir Michael Heseltine recently told the Today programme that London was “sucking the life” out of the rest of the country and this situation continues to be reinforced by the huge proportion of Government spending devoted to the capital.
A recent report for the Jimmy Reid Foundation written by Margaret Cuthbert, a former Government Economist, finds that London continues to suck in huge amounts of capital and skilled workers from the rest of the UK. For example, over the last 50 years, 78% of the entire UK’s transport budget has been spent in London.
And, in 2010, this situation had developed during the 13 years of the Labour Government when most of the senior politicians were actually based in the North of England, Scotland and Wales. What chance does the rest of the UK have now that we are governed politicians who very rarely venture north of Watford?
After all, their very first action as a Government was to abolish the English Regional Development Agencies.