North sees lowest investment of advanced economies after missing out on almost £200 billion

The North has missed out on over £200bn leaving it with the lowest levels of investment among advanced economies, a new report has warned.
Mason Boycott-Owen
By Mason Boycott-Owen
Published 25th Jan 2023, 06:00 GMT

Research by the IPPR North think tank places the North in an international context to show the chronic underinvestment the region has suffered.

If the North were a country it would see the second worst levels of private and public investment of any OECD nation, second only to Greece, it warned.

Researchers said that the UK was now “divided by design”, while the Government last night argued that the report “fundamentally misrepresents” its attempts to level up the country.

Prime Minister Rishi Sunak (left) and Minister for Levelling Up, Housing and Communities, Michael Gove (second left), with Morecambe MP David Morris, during a community visit to the Eden Project Morecambe.Prime Minister Rishi Sunak (left) and Minister for Levelling Up, Housing and Communities, Michael Gove (second left), with Morecambe MP David Morris, during a community visit to the Eden Project Morecambe.
Prime Minister Rishi Sunak (left) and Minister for Levelling Up, Housing and Communities, Michael Gove (second left), with Morecambe MP David Morris, during a community visit to the Eden Project Morecambe.

Countries like Slovakia, Poland, Czechia and Hungary all experience greater investment than the UK and the North.

If the UK had seen the same investment as the OECD average, around £195 billion more would have been invested in the North from 2017 to 2020.

In contrast, figures from the Department of Levelling Up revealed that it had spent only £9.9bn of levelling up-related funds since 2019 across the whole of the UK.

This includes the £2.1bn of investment announced in the latest round of the Levelling Up Fund, which saw Yorkshire receive £120m, just over half the amount allocated to the South East of England.

Report author and IPPR North research fellow, Marcus Johns commented: “The UK stands out internationally for all the wrong reasons.

“Of all the advanced economies around the world, ours is the most regionally divided and getting worse – the North is at the sharp end of these divides and that’s a barrier to prosperity.

“But what’s even more unacceptable is that our country is divided by design. It is the result of decisions.

“The North’s strengths are national strengths. Northern prosperity can be national prosperity. It’s up to the government to unlock this potential, by acknowledging that it has to change, and by enabling empowered, well-resourced local government to coordinate and deliver long term local visions for change. There are plenty of examples out there for how we can do better”.

The research by the think tank found that hourly pay in the North is around £1.60 than the rest of England and productivity is around £7 lower per hour worked.

It called on the UK to look at regions in Germany, Italy and Japan as a model to bring the region back to its former levels of prosperity.

Researchers argued that the North should chart a different course, and focus on investment, progressive taxes and regional and local powers more effectively.

It pointed to areas such as Leipzig in Germany, which has levelled up through industry and investment to become the fastest growing city in Europe, utilising Germany’s constitutional commitment to reducing regional inequality.The IPPR report also noted that Bilbao in Spain was able to jumpstart a cultural regeneration which left household disposable income more than £4,000 higher than the North.

Zoë Billingham, Director of IPPR North, said: “The international evidence is clear: governments that let go of power and collaborate positively with local places can succeed in levelling up.

“We must turn the economic fortunes of our country around. Our leaders need to think big and look beyond our borders for inspiration.

“Political leaders need to ‘zoom out’ and learn lessons from our international neighbours to achieve regional growth and narrow our aching divides. We know that private investment follows public investment. We also know that the government has the choice to invest for the long-term in regions like the North to take the UK from a low investment economy, to one that, finally, thrives.”

A government spokesperson said: “This report fundamentally misrepresents the clear steps we are taking to level up the region and we are committed to spreading opportunity across the whole of the UK, including the North of England.”