The UK now has a multi-speed economy and we need a balanced approach to how big economic decisions are made, as well as more aggressive regional policy
The argument against Britain joining the single European currency was always that it was impossible to set a single monetary policy to suit a diverse range of national economies. Yet, the irony is this is exactly what now looks like happening within the UK.
Certainly if a recent poll of leading economists in The Times is to be believed, 59% of them predict a rise in rates through 2015. This may make sense seen through the lens of the London property bubble, where house prices have risen by 17.8% in the last year alone, but here in the North West, they rose by just 3.8%.
The UK now has a multi-speed economy and we therefore need a balanced approach to how big decisions about economic policy are made, reflecting the needs of the overall economy, not just one part of it, however important London remains.
The current approach sums up the detached and blinkered focus on the capital and the immediate surrounding areas. Government and other national institutions simply view everything through this prism.
Yet without counter-measures in place, any rise in interest rates will see the economy in places like Liverpool suffer, choking off a recovery that becomes more fragile the further north you travel up the M6.
This is not just an argument about fairness (although it is manifestly unfair to penalise home buyers in Liverpool because of the lunacy of the London property market). We also need to realise the potential of Liverpool and the other core cities, ensuring they are motoring to the full for the good of the national economy.
Yet, as the Centre for Cities has pointed out, eight out of ten private sector jobs created between 2010 and 2012 were in London. This is madness and a damning indictment of how unbalanced our national economy has become. For good measure, it is also socially divisive and politically unsustainable.
2015 must be the year where we see a much more aggressive regional economic policy to narrow the gap between London and the rest of the country. The regional growth fund, enterprise zones and local enterprise partnerships are simply not equal to this task; not when the government has slashed regional growth funding by two-thirds. Not to mention the 58% cut to Liverpool’s budget since 2010.
So we need talk of a “Northern Powerhouse” to move beyond rhetoric and lead to hard political commitments, genuine devolution of decision-making power and real cash. As for the Bank of England, it needs a stronger focus on what is going on beyond the precincts of Threadneedle Street.
If it would help ground the Monetary Policy Committee’s decisions in the needs of the real economy, then with more listed buildings than anywhere outside London, I’m sure we could find Mark Carney a home here in Liverpool.
Joe Anderson is Mayor of Liverpool
