The UK’s North-South gap may be widening again

Inequality is on the rise. Not so much between countries as within them. There is some worrying indications, reported this week, that the gap between Britain’s best performing and worse performing regions remains thoroughly entrenched.

Assuming wages and prices are flexible, and factors of production are mobile, inequalities should be ironed out over a few years. People would migrate away from declining regions to booming regions with better pay and employment prospects. At the same time, firms should migrate away from high cost areas into less congested, cheaper locations. But both firms and labour seem quite geographically immobile, so pockets of poverty and prosperity persist.

According to the BBC (with video clip), the gap between economies in northern and southern English cities has dramatically widened in 10 years. A study by the Centre for Cities says for every 12 jobs created since 2004 in southern cities, only one was created in cities elsewhere. It said overall growth had been mainly driven by southern English cities, but big Scottish cities had grown well. This data has been picked up and nicely illustrated on Buzzfeed.

I prefer not to talk about relative poverty in Britain, because I think it just confuses people. It’s a massive issue, but that issue is inequality. Check out UK earnings maps and regional employment patterns.