London — When in may 2013 I left the Bank “Goldman Sachs” (Goldman Sachs), I had the privilege of chairing an independent Commission on urban growth, which was to examine geographical imbalances in the UK economy. Our task was to determine why London and the South-East of the country has gained such a dominant role, and how you can improve the economic performance of other major urban centres.
Our most important conclusion was that the key cities of the North of England close enough to unite in a single market — the same size as the market of London with the suburbs. In the case of the creation of such economic and commercial agglomeration, which we have described, the UK would become the owner of not one but two urban commercial centres that can compete on a global level. It is extremely important that this model, which received then the name “Northern economic center” (“Northern Powerhouse”), was designed to complement London, rather than weaken his position competition. The aim was to both the centre has restored a geographical balance in the country and increased its economic growth in General.
In June 2014, George Osborne, who was then the Minister of Finance approved the plan, after which I joined the government of Prime Minister David Cameron to help in the implementation of this plan. But because of the referendum on Brexia held in June 2016, and Cameron and Osborne resigned (in July), and in September it did me. However, I still have the ability to closely monitor progress in implementing that plan as Vice-chair of the “Partnership of the Northern economic center”, a non-governmental organization, which Osborne created in the fall of 2016.
Since then, the project “Northern economic center” it is usually said that he was blown away. Given the continuing chaos of Breccia, there is no doubt that this project (like almost everything else) has ceased to occupy an important place in the political agenda of the government. But this does not mean that he is forgotten. In April the successor to the Osborne — Philip Hammond — said he was ready to allocate 39 billion pounds ($51 billion) to Finance the railway project “Northern economic center”. Reducing the time of trips and freight between major cities in the North of the country, this project can improve performance in the region and contribute to the achievement of the original objectives of the plan create a “Northern economic center”.
The result of my work at the head of the Commission on urban growth has resulted in a firm belief that measures to improve performance in certain geographical areas are more important than similar measures in respect of certain industries. No one knows which sector of the business in the future waiting for rapid growth. Only 25 years ago few could have predicted that “Amazon” (Amazon) and “EPL” (Apple) will take the positions they are in now. But cities and regions never disappear, although they can decline and come.
Fortunately, a wide chorus of authoritative commentators and experts began to pay attention to the importance of the physical, real places to ensure the sustainability of modern capitalism. Chief among those experts is Paul Collier of Oxford University, one of the world’s leading experts on development Economics, as well as Raghuram Rajan, a former Governor of the Reserve Bank of India and now Professor at the School of business. Booth at the University of Chicago. I deeply hope that their arguments in favor of economic and social measures targeted at local communities, towns and settlements will have an impact on power.
As regards the project “Northern economic center”, that is data about moderate, but progress. Yes, of course, in the last decade, London has done better than city of the North. This is evidenced, in particular, the index of business activity (PMI) in London, the region of Yorkshire and Humberside and North-West of the country. In addition, many economic experts believe that London is more resilient to the impacts of Brexia than industrial areas of the country.
But look at the same data PMI in the narrower context of the past five years and especially the last three years. Other regions began to outpace London, while the North-Western region shows particularly good results, and Yorkshire strengthens its already notable margin.
This difference is due to the fact that London itself is losing ground, which is likely caused by the downturn in the property market and cooling of the investment climate due to Breccia. However, the regions associated with the project “Northern economic center”, demonstrate sustainable power, and the data of indexes of business activity is confirmed not only by practical evidence of life, and other indicators of regional economic statistics, for example, data on housing prices in recent years.
All of these trends can be random and fleeting. But there are reasons to believe that they testify to a deeper, structural changes that were the result of moderate empowerment of local authorities and measures of development cooperation, adopted by the British Parliament in the period 2015-2017. If the government seriously intends to invest in the railway project “Northern economic center”, this will greatly accelerate the progress already made, mobilizing — literally and figuratively — “the animal spirits” of business, civic leaders and citizens of the Northern region.
Jim O’neill — former Chairman of the Board of Directors, “Goldman Sachs” (Goldman Sachs Asset Management) and former Minister of Finance of great Britain, is Chairman of the “Chatham house” (Chatham House).
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