The Economy: London 1 v The Rest of Britain 0

by Charlie_East_West on October 24, 2013

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Here are today’s classified results from the UK economy regional league:

London and The South East 1
V
The Rest of Britain (excluding Scotland) 0

Regional economic findings published in today’s Guardian now show that London and the South-East England economies are booming, whilst the rest of the UK remains stuck in the rut of recession.

During the boom era from 1997 to 2006, London and the South-East were responsible for 37% of the UK’s growth in output. Since the crash of 2008, their share has risen even further to 48%. Almost half of the entire economic output in this country comes from the London and its suburbs. Every other nation and region – with the exception of Scotland – has suffered an ecomomic decline over the same period.

It gets even more divided in terms of wealth:-

- The highest earners have become even more prosperous after the 2008 crash, while many on middle and low incomes are being squeezed even harder. Currently, the top 20% of earning households are enjoying 37.5% of Britain’s income growth.

- There is a current housing price spike of over 10% in London, while many other parts of the UK housing market remain in a slump.

- Over the past year, 96,000 new jobs have been created in London and 103,000 in the South-East, a total of almost 200,000. For England as a whole the figure was just 207,000.

- Many economists now expect that by 2025, the South-East economy is expected to be in surplus by £50bn and the rest of the UK will be in a £40bn deficit.

Let me state this loud and clear. We. Are. Not. Out. Of. Recession. The economic indicators of a country should always delve much deeper than just on the surface overall GDP figures. We are facing the worst living standards for 100 years, and three quarters of the country are scrabbling around trying to make ends meet, whilst the remaining one quarter of the population (South East England) is responsible for half of the UK’s economic growth output.

We are a country of two countries. The South East and the rest. One is booming, the other is bust. So, please can we all remember these economic facts of divide and rule, when in all likelihood, tomorrow’s set of GDP figures show the largest quarter of increased growth since 2000. We have a two track economy in this country.

In his first major speech as Prime Minister, David Cameron described Britain as “more and more unbalanced, with our fortunes hitched to a few industries in one corner of the country.” – Well, thanks to Cameron, Osborne et al – one corner of our country has just become even more fortunate.

So, why not just go the whole way and have a referendum not just for Scottish independence, but for London/South East independence? It appears that this region is operating under a different set of terms and conditions to the rest of the country anyway.

Here are the regional (haves and have nots) economic figures:

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{ 8 comments… read them below or add one }

Alx w October 24, 2013 at 5:03 pm

Before those from london and se make any comments about subsidising the rest of the country, i think a simple point should be made. There was a clear decision made at some point to pursue an economic policy that exclusive favoured financial services. The economic policy of this country had always been more heavily skewed in this direction but from the eighties a choice was made, which can even be seen within the context of education and the make up of the national curriculum. We could have pursued a german model, certainly the engineering expertise was still in place in the seventies, but instead investment, regulation and general policy (remember those privatisations) have all moved more and more wealth to london. Let us be clear very little of this is genuine wealth creation and in the longterm it is unsustainable. Crucially these are not labour intensive industries and so we continue to see concentration wealth and gvt afraid to make th real decisions because (probably correctly) they fear killing the golden goose that provides a big chunk of taxes. There is a word for this kind of relationship where you are trapped with something that is slowly making your health worse: drug addiction. The solution might mean pain, but if there was a genuine goal it might be bareable. Don’t hold your breath

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Mike Killingworth October 24, 2013 at 7:03 pm

I am not sure that the addiction analogy is that helpful: what would recovery look like?

The next step is presumably for a new political party to propose separation for London and the South-east along with a libertarian agenda.

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Charlie East-West October 24, 2013 at 7:24 pm

Why not go further? Corporate Republic of London. Scotland and the North form a Northern Alliance to become the Northern Caledonian People’s Republic. Northern Ireland is tricky…and what to do about Wales?

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Jackie_South October 24, 2013 at 10:14 pm

George and I mused a couple of months ago about London independence (certainly not including the SE!) as a way of having a rich social democratic state that could redistribute to some of the country’s poorest intercity communities without doing much damage to the standard of living of the better off.

But the reality is that Alx w’s point about the damage done to the industrial north is a good one. It’s just a shame that so much of he wealth generated in London doesn’t get much further than the SE and doesn’t go further north.

Charlie mentioned Northern Ireland – the great unspoken issue in the Scottish referendum: how much should Scotland be bunging into the kitty to keep NI afloat and the peace process going, given its critical role in creating the problem in the first place?

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Alx w October 24, 2013 at 11:44 pm

Until the returns on making things, even high end products or science/tech industry matches those from financial gambling, nothing is likely to change. The housebuying agenda is a classic example of how wealth from the rest of the country gets sucked up. Now housing costs contribute to overall welfare bill as well as making costs of living high.

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George_East October 25, 2013 at 10:29 am

I am actually quite attracted to the idea of independence for London – certainly without the south east. The model would be a city state like Singapore (though without that country’s authoritarianism) – indeed its economy would be broadly comparable. London is far more comfortable with its multi-racial identity than most other parts of the country and I agree with Jackie that its politics (Boris notwithstanding) are actually pretty progressive, when taken as a whole. I think it could have advantages for the remaining bits of UK as there would no longer be the distortions of the London financial markets sucking investment away from the rest of the country.

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Mike Killingworth October 25, 2013 at 2:13 pm

George, I think Charlie’s “corporate Republic” jest is more than a jest: the choice for London (and I live in the middle of it) is between doing what the financial services sector tells it to do, and not having a financial services sector.

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alx w October 25, 2013 at 2:26 pm

Aside from the history, it would make more some sense allowing London and Thames gateway (including new airport) could become a kind of ‘free state’ a la singapore. It could even opt out of the EU. The rest of the UK could then establish policies built around a combined industrial/agricultural policy, the only problem would be where to put the capital. Do we do it by geographical centre (Preston?!!) or by some kind of population proximity calculation which would put it further south? Or just go for the next biggest city/conurbation Brum/Gtr Man/West Yorks? Or save money by using the existing infrastructure in Edinburgh for a UK parliament?

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