The imbalance of Osborne’s economy

London has shot ahead of other parts of the UK in growth and jobs since 2010 according to new research by the TUC. The London economy accounts for an even greater chunk of the UK economy and jobs than it did before the banking crash.

The research follows an expose in the Observer showing the ÂŁ13bn transport element of Osborne’s  ‘Northern Powerhouse’ is not stacking up. It turns out ÂŁ5bn is money already in the pipeline for cycle lanes and potholes and little of the rest is ‘new’ money.

Labour has accused the government of misleading parliament and cynical “pre-election spin”. The so-called “Northern Powerhouse” initiative was meant to head off attacks that UK economic and jobs growth was tilted to London and the South East and had to be ‘rebalanced’.

The research for the TUC, using the most up-to-date figures, points to increasing London domination of the UK economy since 2010. It is remarkable given the job losses in banking and finance which hit London hard following the global banking crash and recession which followed.

From 2010 to 2013, the London economy grew more than one and a half times as fast (163 per cent) as the rate of the UK economy as a whole. By comparison, growth was only around half the national rate in Northern Ireland (49 per cent) and the North West (51 per cent).

From 2010 to 2014, jobs growth in London (11.5 per cent) was twice as fast as the UK as a whole (5.1 per cent), three times as fast the West Midlands (3.7 per cent) and South West (3.6 per cent), four times as fast as the North East (2.9 per cent) and Wales (2.7 per cent), and six times as fast as the North West (1.8 per cent).

In 2013 economic activity in London accounted for 22 per cent of the value of the entire UK economy, up from 21 per cent in 2010 and 19 per cent in 1997. In 2014 London accounted for 14.2 per cent of all UK jobs, compared to 13.5 per cent in 2010 and 12.4 per cent in 1997.

TUC General Secretary Frances O’Grady said, “We need a recovery that works for the whole of the UK, but cuts to infrastructure and services have hit places that are most in need of investment.

“We now have an unbalanced recovery that is too weak outside of London, too dependent on families getting into debt, and too focused on jobs in low-paid service industries.”

Unite head of Community, Liane Groves said, “In 2010 Osborne said he was going to re-balance the UK economy but the opposite is happening. London is growing because of huge infrastructure investment which has led to economic growth and jobs.

Calling out

“The rest of the UK is calling out for London levels of investment. Economic growth and job creation depends on high investment in training, in public services, housing and infrastructure.

“That works in London and it can work elsewhere. But Osborne will not follow the London recipe for success but wants massive cuts which will hold back growth outside London and the south east.

“The result will be even greater London domination of the UK economy. Middle and lower earners in London – and parts of the capital are very deprived – will see their spending power squeezed as more of their income gets gobbled in by rising housing costs.

“London itself cannot sustain the increasing pressures being put on it by its economic domination of the UK. We need a much better balance of growth and jobs.”