Sunday, 5 December 2010

Now lets have a balanced recovery

Yesterday, I posted about the cautious cause for optimism that the UK economy may be recovering and can stand the projected public sector cutbacks.

However, there is a big “but”. The picture is far from uniform across the country and more needs to be done to help depressed communities, that never saw the fruits of the boom, to develop an indigenous enterprise culture, rather than the only approach that has worked to date, bribing multinationals to inwardly invest.

Inward investment works in the short term but in the North East we have seen many firms come in and then go out as quickly as you can say “Slovenian subsidy”. The Siemens plant in North Tyneside was a classic example. Nissan is a glorious exception but none the less, it constantly keeps the pressure on the UK government for subsidies with threats to move production overseas.

I am not sure that any UK government has cracked how to boost very low levels of business start ups that hasn't just involved heavy subsidy to set up small firms that are not likely to grow to the size likely to produce that much work and probably would have set up anyway.

But somehow we have got to get there, or the North South divide will continue to get worse and our most talented children will move south every generation/ I am not sure throwing money at the problem is the answer but the local authorities need to be given the power to create dynamic areas. Maybe the Regional Growth Fund will help, and certainly the NI exemption in deprived regions is a help, but is it enough?

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