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HMT wasting £40bn Northern economic potential

The UK economy would be £40billion better off if Northern economic potential was properly utilised and brought closer in line with other English regions. Narrowing the difference in output by only 50 per cent between the North of England and the other English regions would be equivalent to over £1,600 per English worker, a new report by the Northern Economic Futures Commission finds.

The Commission, which was established in July 2011 and is made up of high profile figures from business, academia and the public sector, argues that a greater focus on the economic potential in the North of England would bring benefits for the whole of the UK but currently this potential is being constrained.

The Commission argue that the North of England plays a vital role in national economic resilience and the regions assets and strengths should be maximised. The report finds that the value of export goods, business investment in R&D, and rates of entrepreneurship are all growing faster in the North than the South.

Rates of entrepreneurial activity over the last decade have:

·         Increased by 59 per cent in the North East

·         Increased by 25 per cent in the North West

·         Increased by 56 per cent in Yorkshire and the Humber

·         Increased by 26 per cent in the East Midlands

·         Increased by 29 per cent in the West Midlands

·         Increased by 4 per cent in the East

·         Increased by 3.5 per cent in the South West

·         Decreased 3.5 per cent in London

·         Decreased by 3.5 per cent in the South East

 
It also finds that business survival rates in the North have been significantly better than anywhere else in the country since 2008.

The report also argues that if the government were to tackle head-on the unemployment problem in the North of England and brought it down to the average in the rest of England then the government could be £1.2 billion better off. Unemployment currently stands at 9.9 per cent across the North compared to 7.9 per cent average in the rest of England.

The Commission will lay out its recommendations on how to boost economic growth in the North of England for the benefit of the UK economy in its final report later in the year.

Geoff Muirhead, Chair of the Northern Economic Futures Commission said:
“The North South divide has existed for too long and it’s having a negative effect on the national economy which is desperate for growth. Our Commission is convinced that we can unlock potential for vital growth in the North of England if government creates a more level playing field. So-called ‘spatially blind’ policy-making has simply favoured short-term returns in London and the South East. The North doesn’t need more hand-outs but a long-term economic strategy which recognises the differences between places and the need for more local approaches to skills, innovation and infrastructure.”

Ed Cox, Director of IPPR North and Deputy Chair of the Commission said:
“In terms of sheer scale the North cannot be ignored. Twenty seven per cent of England’s working age population lives in the north but only contributes 23 per cent of national economic output. If the North was a country then it would rank as the 8th biggest economy in the EU, twice the size of Scotland and bigger than countries like Sweden and Denmark. If the national economy is to prosper the North needs to be performing strongly – it’s in all our interests.”

Notes to Editors:
The Northern Economic Futures Interim report - Northern Prosperity is National Prosperity - will be published on Monday 16 April.

The Northern Economic Futures Commission was established in July 2011 to spearhead an ambitious programme of activity and research to look at the critical issues facing the economy of the North and set out a new approach to local and regional economic policy, driven by decision-makers in the North of England.

The aim of the Northern Economic Futures Commission is to articulate a ten-year strategy for long term and sustainable economic growth across the North of England. The Commission is now at its half way point and will publish its final report and recommendations later this year.

Rates of entrepreneurial activity are from 2002-2008, source BIS

Value of export goods per workforce job, 2010 (£) BIS

North East

10,113

South East

9,685

United Kingdom

8,390

East of England

7,936

North West

7,373

East Midlands

7,064

West Midlands

6,656

London

5,911

Yorkshire and the Humber

5,565

South West

5,314

 
Commission members:

  • Geoff Muirhead, Former Group Chief Executive, Manchester Airports Group (Commission Chair)
  • Ed Cox, Director, IPPR North (Commission Deputy Chair)
  • Bill Adams, Regional Secretary, Yorkshire and Humber TUC
  • John Anderson, Regional Director for Yorkshire and Humber, BT Group
  • Rhiannon Bearne, Policy Manager, Cyrenians
  • Paul Callaghan, Chairman, Leighton Group
  • Adeeba Malik, Deputy Chief Executive, QED-UK and Co-Chair, National Ethnic Minorities Business Taskforce
  • Philip McCann, Lecturer, University of Groningen
  • David McKeith, Chair, Chamber of Commerce Greater Manchester
  • Rodger McMillan, Therapy Area Head, Respiratory and Inflammation, Astrazeneca
  • John Mothersole, Chief Executive, Sheffield City Council
  • Peter Nears, Strategic Planning Director, Peel Holdings Ltd.
  • Ann Pittard, Large Business Development Lead, Leeds City Region
  • Philip Shapira, Professor of Innovation Management and Policy, University of Manchester
  • Bill Tompson, Head of Rural and Regional Development Unit, OECD
  • Julia Unwin CBE, Chief Executive, Joseph Rowntree Foundation
 
IPPR North analysis, shows that around the country unemployment will rise this year:

·         an extra 32,000 people will be unemployed in the North West
·         an extra 11,000 people will be unemployed in Yorkshire & Humberside
·         an extra 9,000 people will be unemployed in the North East

For more see: http://ippr.org/press-releases/111/8977/extra-100000-people-without-a-job-this-year

Contact:

Tamsin Crimmens, 07800 742 262, t.crimmens@ippr.org



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