A nation of two halves

I remember coming across this when it first came out in 2016, and since then, I’ve had several exchanges with people, during which I wished I could find the primary data again.

But here it is. Data from the ONS  showing that London, the East of England, and South-East England effectively subsidise the rest of the UK. (Full Report)

screen shot 2019-01-14 at 14.56.11

The study was also produced in 2017, but it seems they were more careful in 2017 not to present us with the above graph. Nevertheless they do show that, while there was YoY movement in the regional metrics, the overall situation did not change.

Before the Scots start moaning about oil and gas, these numbers include offshore fossil fuel revenues.

When you dig into the numbers, there are various things that can be identified, but my summary view is as follows:

  1. Most of the UK does not make a net contribution to public finances
  2. London looks like a stellar performer but, when you dig into the numbers, the massive revenue from the City and surrounding industries hides the fact that London is a public spending basket case. And why wouldn’t it be? There are not just pockets of poverty and deprivation in London. There are whole sacks full of it. Places were money is hurled at papering over the divisions between the haves an the have nots, and trying to keep a lid on the social tensions this engenders.
  3. In spite of the fact that these 3 regions of England subsidise the rest, the net fiscal balance is overall hugely negative. The industriousness of these areas does not mitigate the apparent basket-cases that are the rest of the UK regions.
  4. I suspect that if you look at metropolitan areas – Manchester, Birmingham, Liverpool, Edinburgh, Belfast etc, you’d find that these areas are net contributors. Manchester, for example, is booming compared to 30 years ago. As is Liverpool. Edinburgh has a very sizeable financial services industry. The reason that the regions overall come out negative is the massive proportion of people in these regions who are languishing in the no-longer ‘relevant’ outlying areas of the regions.

What this means is that probably 75% of the UK’s population is ‘out of the loop’ as far as real economic opportunity goes.

There’s an interesting piece in The Spectator, about the economically disposessed peoples of Europe (focusing on France, but it cuts across the continent). I think the same case transposes pretty well onto the UK.

In Italy the precipitation has been the election of a left/right coalition of ‘populist’ parties.

Similarly in Germany, the establishment parties are in decline and the AfD is on the rise. The German establishment has done away with any illusion of free speech, by criminalising all sorts of dissent about the outcomes of Merkel’s progressive immigration policies.

France’s electoral system means that in lieu of a populist political revolt, they accidentaly elected a Nitwit Napolean who they now all despise.

In France, therefore, we’ve seen the rise and rise of the Gilets Jaunes. I thought initially that they would be a flash in the pan, but the movement is proving to be a bit more tenacious than I ever expected. A poll showed that 77% of French people considered them to be justified.

There’s the incipient movement in the UK, that the media and the establisment are intent on suppressing before critical mass occurs, and a great many peple waiting to see what the outcome of Brexit will be.

Across the UK and Europe, these people aren’t going away.

AJ

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