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British Business Bank with regional funds could provide the answer on growth
Regional banks could stimulate growth across the UK.
A regional dimension to the proposed British Investment Bank will help stimulate local productivity and growth across the UK to help lead the country out of economic stagnation, according to a new report published yesterday by the think tank IPPR North.
Building on Vince Cable’s announcement of a British Business Bank, and Ed Miliband’s recent call for a network of local banks, IPPR has set out a blueprint for a more ambitious and regionally focused British Investment Bank.
The new report calls for such a bank to have a clear regional allocation of funds, allowing it to respond to diverse local economies and stimulate much-needed long term investment in the North.
The report argues that the North faces five key barriers to economic growth;
- lower public investment to grow the economy in areas like science, technology and infrastructure than London and the south east
- more difficult access to credit for small and medium sized enterprises
- lower access to private equity and venture capital
- A greater dependence on public sector investment – around 75% of early stage investment in the North compared with 30% in London prior to the recession
- Disproportionately deep cuts to local government, housing, transport and capital budgets
The report also sets out a number of other proposals to help local businesses, councils and LEPs meet these challenges and arms them with the tools and the autonomy to stimulate regional and local economies, including:
Greater use of municipal bonds to enable greater investment in local projects, by councils and local enterprise partnerships
The creation of a northern investment vehicle, capitalised by pension fund investment to raise finance for housing and infrastructure investment in the north
Ed Cox, Director of IPPR North said:
“Investment in the local economy by both businesses and government is a key driver for productivity and growth. A British Investment Bank must not contribute to reinforcing economic disparity across the country, but must give the North the chance to drive its own economic revival. It can help compensate for underinvestment in infrastructure allowing regions to fund their own strategic priorities and give northern businesses the lending they need to thrive.”
Notes to editors:
IPPR North’s report, Beyond big banks and big government: Strategies for local authorities to promote investment, it is available to download at http://www.ippr.org/publication/55/10545/beyond-big-banks-and-big-government-strategies-for-local-authorities-to-promote-investment
This research was undertaken as part of the Northern Economic Futures Commission. The final report from the Northern Economic Futures Commission, Northern prosperity is national prosperity: A strategy for revitalising the UK economy, sets out a new economic agenda for the north of England, one which seeks to place the region at the heart of the UK's 'rebalancing' towards business investment and export performance. It is available to download at http://www.ippr.org/publication/55/9949/northern-prosperity-is-national-prosperity-a-strategy-for-revitalising-the-uk-economy?siteid=ipprnorth
IPPR’s report, Investing for the future: Why we need a British Investment Bank, is available to download at http://www.ippr.org/publication/55/9635/investing-for-the-future-why-we-need-a-british-investment-bank
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