The Centre for Economic and Business Research and the law firm Irwin Mitchell have published research into business growth over the next 10 years.
They report that the cities which make up the ‘northern powerhouse’ will not grow as quickly as London over the next 10 years, despite Conservative efforts to close the already existing gap in prosperity.
London’s economy is forecast to grow by 27% by 2025, whilst the combined rate of growth across northern cities is almost half that. The findings account for improvements resulting from regeneration projects, improvements in transport and the devolving of power from the centre already announced.
Northern business leaders have long supported the development of road links over high speed rail to support the revitalisation of their cities, something support by this report, and have campaigned for a local, rather than national, living wage. In addition to these measures the CEBR believe that allowing regions to set tax rates (the Conservative party announced the devolution of business rates at their conference this week) and the introduction of more enterprise zones around universities would help to address the imbalance.
Scott Corfe, head of macroeconomics at CEBR, said: “After winning the May general election, David Cameron vowed to lead a ‘one nation’ Conservative government. Yet significant announcements to spread growth across the UK have been surprisingly lacking to date.
“Without more radical measures, David Cameron risks breaking his vow, particularly as further austerity has the potential to hold back the economies of some of the UK’s poorest regions. It is vital that private enterprise is allowed to thrive in these regions as a way of offsetting austerity.”
Niall Baker, head of business legal services at Irwin Mitchell, said: “Although it is good news that London and the south-east will continue to prosper, it’s clear that a radical rethink of the government’s wealth spreading agenda is required. Investment in infrastructure is one part of the mix and we believe that the government needs to listen to the voice of business and employ a range of policies tailored to different regions.”