BoE’s Andrew Haldane warns of regional growth inequality
2 December 2016
- From the section Business
Regional inequality in the UK is becoming more pronounced, Bank of England chief economist Andrew Haldane has warned.
London and the South East are the only places in the UK where income per head is back above pre-financial crisis levels, he said.
Net wealth has also fallen in places such as the north-east of England.
But without action by the Bank, the regions could have faced economic contraction, he added.
“The UK, I think, is towards the bottom of the league table within Europe in terms of its degree of difference across regions,” Mr Haldane told the BBC economics editor Kamal Ahmed.
He said that wage differences between regions of the UK could differ by as much as 50% and that the productivity gap between regions could be as much as 60%.
Mr Haldane also said there had not been much evidence of those gaps shrinking over the past few years.
“If anything these gaps, which are of long standing have nudges a little wider over the course of the UK’s recovery,” he said.
There was no single reason why there were such big and persistent differences between regions, he said.
But he thinks differing levels of skills and research and development could be partly to blame.
The Bank of England lacks the tools to tackle the problem, according to Mr Haldane.
“The tools we have at our disposal are, truth be told… few in number and rather blunt in impact. They tend to work by lifting all boats across the whole of the UK,” he said.
Mr Haldane was giving a speech at an iron and steel research centre in Redcar, North Yorkshire.
This post was written by FSB News