The north of England can’t handle another recession. Coronavirus could sink it

Many of us, while nipping to the shop or on our daily walk, will find ourselves gazing into the dark, empty windows of pubs and restaurants, looking forward to the day when things go back to “normal”. But it’s becoming increasingly clear that the high street of six weeks ago is gone, as businesses struggle to pay rents with no income. Even successful pubs and restaurants are already being listed for sale.

We’re now starting to get the first tentative bits of economic analysis into where all the pieces may lie when things finally start picking up. And it’s very apparent that the north of England is about to hit serious economic trouble.

Of the 20 places in Britain with the highest proportion of employees working in restaurants and pubs, 10 are in the north, and just five in the south. Indeed, research from the Royal Society of Arts this week found that chancellor Rishi Sunak’s constituency of Richmond in North Yorkshire could lose the most jobs, as 35% of his constituents work in hospitality.

Naturally, very few parts of the UK will be spared serious damage. Yet, while the wealthier regions of London and much of the south could absorb the impact of another recession, there are a lot of indications that the north simply cannot go through that again.

Figures show the south-west is taking enormous hits in this crisis too. But the south hasn’t had quite the same economic battering over the past decade – between 2009-10 and 2017-18 public spending in the north dropped by £3.6bn, while rising £5.1bn in the south.

The reality is that whole swathes of the north have still not fully recovered from the last financial crash. When the IPPR thinktank looked into the five-year progress of the Northern Powerhouse project last year, it found the number of children in poverty in the north had increased by 200,000 to 800,000, the jobs paid less than the living wage rose by 11%, and real-terms weekly pay increased by only £12 in the north compared with an average national rise of £19.

So not only is the north-south productivity gap at Victorian levels thanks to decades of underinvestment and a brutal 10 years of austerity – it is actually getting worse. Northern councils are now warning of “alarm bells” over huge gaps in funding, as some are struggling to provide basic services. Most councils in Britain have already been stripped to the bone and, with no cushion, some are now considering bankruptcy.

Put simply, there’s nothing left to cut in the north. Another round of austerity would simply collapse many towns and cities that were already just scraping through. We have the developed world’s biggest regional economic divide, across virtually every measure. For our London-dominated politics it’s a simple case of “out of sight, out of mind”.

Governments have a history of protecting the financial centre of London and the south-east. Despite the chancellor’s own constituency being hit badly, there’s little indication that this time will be any different – which would be such a wasted opportunity.

There are endless ways of investing in Britain that would support the whole of the UK and reduce the north’s drag on the economy. The government could temporarily suspend the 20% VAT on food served in pubs and restaurants for the year after lockdown finishes, or remove tax on beer and wine. Just like Gordon Brown’s car scrappage scheme, these measures would cost the exchequer in the short term but could keep local economies afloat, saving more in the long term.

Or something even more substantial – a holiday voucher scheme where the government pays, say, 30% per cent, towards the cost of a trip in the UK, whether that’s a weekend in a caravan in Blackpool or 10 days in a luxury eco-home in the Cotswolds.

It’s likely this government will fall back on the same regressive measures that Conservatives have traditionally used . But it’s now clear that, without careful handling, the looming economic collapse in parts of the north will totally overshadow the 2008 crash and its aftermath.

Robyn Vinter is a journalist and editor based in Leeds, UK. She is founder of news startup The Overtake

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