Prospects for the Yorkshire Economy

The Yorkshire economy operates within the wider environment of the UK economy. The UK economy is currently in the news due to the “cost of living crisis” which has provoked industrial action in some parts of the economy as workers try to defend their living standards. The UK economy, like every other economy in the world, is currently trying to deal with the aftermath of the Covid-19 pandemic and the consequences of the Russian aggression against Ukraine. The UK economy is dogged by poor productivity, rising inflation and declining competitiveness. There are also concerns about income and regional inequality.

Against this backdrop and in anticipation of the forthcoming Democratic Yorkshire event: “What kind of economic future do we want for Yorkshire’s children?” we thought that we would take a quick look at the prospects for the Yorkshire economy.

What do we really want from the Yorkshire economy? It should be able to provide employment for Yorkshire’s workforce and it should also be able to provide future prospects for advancement. It should provide us with all the funds we need to be able to lead productive lives. In other words, it should be able to provide us with all the basics we need to live; security, food, water, clothing, shelter, and it should be capable of providing the public services that we need; healthcare, social care, housing, transport, sanitation and so on. In addition, the economy should be capable of providing us with some of the luxuries in life that we have come to take for granted such as digital communication, entertainment, holidays and perhaps even things like foreign travel. It should be able to do all these things for us in a manner that does not adversely affect the environment. Our economy must also be, in a word, sustainable.

Unfortunately, for us, the Yorkshire economy does not perform sufficiently well to fulfil some of the above requirements. It performs below the UK average and our income per capita is less than half that of the London area. Is this a problem? Well, yes it is if we want the economy to meet these requirements. Bearing in mind that the UK as a whole performs badly, performing worse than this means that we may have to do without more than just a few luxuries. Basic services could be put at risk. Some may say that they already are.

Can we do anything to remedy the situation? The answer to this question is probably yes, with caveats. We have to live within the UK economic environment. The evidence indicates that this has become less competitive. Accordingly, we also have to live with the problems of high inflation, low productivity and a declining currency. On top of that the UK government’s actions have not really made things any better. Lots of words about levelling up do not make up for shortfalls in investment, the lack of any coherent national economic strategy and the lack of any real economic plans.

The Yorkshire economy is probably currently worth around £127BN per annum though finding up to date, accurate statistics is not straightforward. In the past, surveys of the Yorkshire economy indicated that, over time, a regional government could increase productivity by a significant margin. A sum of around £20BN to £30BN per annum was discussed. This could be achieved by targeted investment, the transfer of key functions to the region, far better networking than at present including enhanced transport and communication facilities, the adoption of coherent regional strategies for the economy, industry, research etc. and targeting “foreign” investment in terms of both finance and talent.

It is our opinion that the regional factor could make a real difference, but it could only reach its full potential with the support of the national government and others. For example, the Northern Powerhouse vision would form a part of this strategy. We can only really achieve the optimum outcome working with others in the UK and beyond. Support of the UK government will also be vital. It is essential that the national economic environment supports UK business as a whole and the regional economies in particular. It is counterproductive if the region provides a supportive environment, but the national government does not. It is counterproductive if the national government holds all the investment funds but fails to use them to invest in the regions. If the national government is not going to provide the means for the regions to “level up” then it should delegate the necessary powers to the regions to allow them to get on with the job.

A regional government could make a positive impact on its own but aligned with all other levels of administration, including national government and local authorities, and working with our other partners, the difference could be transformative.

Will this involve economic growth? Yes! The question then arises of whether economic growth is bad for the environment. The answer is yes and no. If growth is concentrated on legacy industries, then the answer is almost certainly yes. Growth should be concentrated on high value “sunrise industries” which concentrate on those areas that reduce our environmental impact. We should aim to create the intellectual property of the future, not concentrate on minimum wage jobs. Yes, many of these jobs are absolutely necessary and the people performing them should be paid a proper living wage and should have our respect, but, if we concentrate our growth in these areas, we will never gain the necessary momentum to achieve our objective of a good standard of living for all. Let us remember that a large proportion of our population cannot be actively involved in the economy.

Some may say we don’t need growth we just need a redistribution of wealth. There is a very strong case for changing the tax system to ensure that high earners and those that make considerable capital gains make a fairer contribution, however, there is also the issue that many operations within the UK are owned by or are dependent on foreign finance. Whilst we must ensure that foreign investment pays its fair share, we must be careful to ensure that we maintain an environment where foreign investment sees that it is welcome and that these investments are secure. A redistribution of wealth will go towards achieving our objectives but on its own and in the nearer term it will not satisfy all our requirements.

So, the prospects for a Yorkshire economy are varied but by no means all negative. With a lot of skill and good leadership, the economy might just meet our needs. What is obvious is that we cannot continue as we are. We are in economic decline and perform abysmally when compared to our closest EU neighbours. This trend must be reversed if we are to provide the Yorkshire people with the prosperity they deserve.

Please follow the link to book for our economic event on 3 August at 18.30.

https://www.eventbrite.co.uk/e/what-kind-of-economic-future-do-we-want-for-yorkshires-children-tickets-366847369357

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