Peter Jackson column

Apr 21 2005 By Peter Jackson, The Journal

I'm sure it happens to you as often as it happens to me. Someone visiting from outside the region puts you on the spot and asks how the regional economy is going.

In the past, local patriotism has prompted me to paint a rosy picture, or maybe some big factory closure made me strike a more sombre note, but now I just generally plead ignorance.

The problem I have is that, although I might have a good impression of activity, or lack of it in the region, I have no first hand knowledge of how other areas are doing.

And economic performance is largely a competitive or relative business, a matter of how individuals, or regions, are doing, not by some absolute measure, but in relation to others.

Normally this is all shrouded in the fog of war but occasionally, as happened this week, the smoke lifts temporarily from the battlefield.

And it has revealed that things are not going according to plan.

We now know, thanks to a recent report, that, if it seemed that the North was closing the great divide with the South, this wasn't because the North was doing well, but that the South was doing badly. While we were bobbing along quite nicely, London and the South-East were suffering from the three-year bear market in shares, with its depressing effect on annual bonuses, and London was actually in recession in 2002.

However, the South is now bouncing back and looking forward to another burst of strong growth, which can only mean, according to the report, by Experian Business Strategies, that the gap is set to widen again. For, while the South was suffering economic hardship, the North was benefiting from Gordon Brown's public spending boom and a huge expansion in the public payroll, which is about to come to an end.

It seems the North's record in creating real jobs is truly abysmal. Another report by Ove Arup and Oxford Economic Forecasting estimates that between 1971 and 2004, the North only created about 10,000 net jobs, including Gordon Brown's public sector positions. This compares to 2.73 million in the South-East.

What the answer? Nobody seems to have one. The only crumb of comfort I can offer is the thought that surely some equilibrium will return when the South-East is strangled by its own success, with spiralling wages and house prices, and crumbling infrastructure and public services.