The Budget is a chance for the Government to recognise the significant regional imbalances in our country
Jonathan Walker, Policy Director, latest column in The Journal.
Tomorrow the Chancellor will set out the Government’s spending plans for the next three years. This is a huge political and economic moment.
The word ‘unprecedented’ was thrown around a lot during the pandemic, but the size and nature of the Government’s intervention to support jobs and keep the economy going was genuinely unlike anything we’ve seen before.
As a result, Rishi Sunak will be under enormous pressure to get a grip on public finances and bring down spending.
But he needs to show that Government has learned the lessons of the financial crash and subsequent austerity by not taking decisions that harm the ability of regions such as ours to recover.
As I’ve written plenty of times here in recent months, the North East has been particularly exposed to the consequences of Covid.
The Budget is a chance for the Government to recognise the significant regional imbalances in our country and take steps to address them.
Our firms are ready for the challenge. Our own surveys show that confidence and performance has risen dramatically since the middle of last year, with companies recruiting and investing across the board.
However, there are major headwinds that threaten to slow down that recovery or even send it into reverse.
Inflation, staff shortages and supply chain issues are all massively growing concerns for North East businesses. While we hope they will be relatively short-lived, they still pose a major challenge to our economy.
This must be at the forefront of the Chancellor’s thinking as he decides his tax and spending priorities. We’re not saying that the public finances don’t matter; rather that decisions need to be made extremely carefully and that there are many areas in which investment now will pay dividends in the future.
Long-term investments in our infrastructure, further support for the transition to a low-carbon economy and stable, devolved funding for regeneration will all help to make our region more resilient in the long run.
The idea of ‘levelling up’ has been changed and stretched far beyond what was suggested in the 2019 Manifesto. We are very clear, its aim must be to close the economic performance gaps that exist between regions. This will require difficult decisions about where to invest, with some places inevitably losing out. If this is done on the basis of solid economic evidence and with the intention of correcting historic underfunding and deprivation, then we will support it.