The North leads way in Britain’s recovery
‘Powerhouse’ springs to life
THE North of England was the fastest growing region of Britain at the start of the year as the recovery spread across the country, according to figures published today.
Gross domestic product increased by 0.5pc in the North East and the North West between January and March compared with growth of 0.4pc in the UK as a whole. The findings, in a report by Royal Bank of Scotland, will be welcomed by George Osborne ( pictured) ahead of tomorrow’s Budget, the first by a fully Conservative government for 19 years.
The Chancellor, who represents the Tatton constituency in Cheshire, has pledged to build a ‘northern powerhouse’ to rival London and the South East as the main driver of economic growth in the country.
But his plans suffered a setback last month when ministers shelved vital upgrades to major rail lines in the Midlands and the North just weeks after the General Election. Patrick McLoughlin, the transport secretary, said that the electrification of the Midland mainline from London to Sheffield and the TransPennine route between Manchester and Leeds had been ‘paused’.
He blamed spiralling costs and missed targets by Network Rail but Labour accused the Government of delivering a ‘northern power cut’. Osborne will be looking to use tomorrow’s Budget to breathe new life into the economy by boosting productivity and balancing the books.
British GDP rose by 3pc last year – the best performance since 2006 and the strongest in the Group of Seven major industrialised nations – but growth slowed in the first quarter of 2015.
London, Wales and the East Midlands saw expansion of 0.4pc between January and March while the South West, South East, Yorkshire & Humber and West Midlands grew by 0.3pc.
The East of England grew by just 0.2pc, according to RBS. A separate report by the British Chambers of Commerce warned that the UK is showing signs of ‘ twotier’ growth as services race ahead of manufactur ing. Factory output fell by 12.2pc in the Great Recession and remains more than 4pc below the predownturn peak. By contrast, output in the services industry fell by 4pc and has more than made up the lost ground.
John Longworth, director general of the BCC, said the UK is set for ‘continued growth thanks mainly to the strength of the services sector’.
He added: ‘The manufacturing sector has battled against structural problems for years but the scale of the slowdown being experienced by our manufacturers is a surprise and a concern.’
The BCC blamed the strength of sterling against the euro and the dollar – which makes British made goods more expensive – as well as underinvestment and insufficient help for firms to break into new markets.
‘If we are to secure longterm, sustainable, diversified growth, the Government must tackle these structural problems, which act as a brake on our economy,’ said Longworth.
Entrepreneur Lord Bilimoria, founder and chairman of Cobra Beer, called for action to reverse the decline in manufacturing from 30pc of GDP in the 1970s to just over 10pc today. ‘The manufacturing sector is a great creator of jobs and sets high standards for skills. It is vital to rebalancing our economy and boosting economic productivity.’