UK Regional Outlook: Autumn 2021

Arnab Bhattacharjee, Adrian Pabst, Max Mosley and Tibor Szendrei

National Institute UK Economic Outlook, 2022, issue 5, 29-40

Abstract: We forecast that stuttering growth will reinforce disparities between and within the UK's devolved nations and regions: not only between London/metropolitan South East and the rest (e.g., the Midlands where pre-pandemic levels of output will not be reached before 2024), but also within regional economies such as the North West and Scotland. Rising inflation due to higher energy and food prices will exacerbate inequality, hitting hard the poorest in society who are heavily concentrated in the country's most economically deprived areas, including parts of Wales and of the South. To mitigate the cost-of-living pressures linked to higher energy prices, we propose an expanded Winter Grant scheme administered by local authorities to help households who require it to pay for energy or food; with an extra £3bn from central government, this scheme would draw on local knowledge of local needs and empower local government to deliver targeted assistance to people who need it most. The combined effect of higher prices and higher taxes in the form of National Insurance contributions (NICs) will push many households into destitution; our headline projection is a 30 per cent rise in destitution because of the differential impact of inflation upon the poor; however, there are large regional variations, with Northern Ireland projected to have more than twice the average increase. The Levelling Up White Paper includes ambitious plans for greater innovation, private investment and a radical shake-up of local government, especially in England; but no substantial new spending commitments have been made nor policies aimed at improving access to finance for businesses in deprived areas; this, combined with continuous central control, will severely limit the prospect for sustained regional regeneration.

Date: 2022
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Journal Article: UK Regional Outlook: Autumn 2021 (2021)
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