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Regional inequality

For real Levelling Up, look to Germany

York train station: better regional links needed. Getty

“Every sizeable country has richer and poorer regions,” says Larry Elliott in The Guardian. But the UK stands out. Measured by income per head, productivity, and disposable income, we’re among the “most unequal of the world’s industrial economies”. For years, regional policy has amounted to “creaming off taxes” from the booming South East and throwing the money at poorer areas – without addressing the real problem of sluggish private-sector employment growth. Successive failures to narrow this divide mean “Britain is now effectively two countries”.

If leaders want to plug the gap properly, “look to Germany”. There, poorer regions receive a “disproportionate share” of research and development funding to kickstart investment. In Britain, money goes to the cities already flourishing – “the golden triangle of London, Cambridge and Oxford” – so firms crowd down south. The same is true of transport. The UK spends the lowest amount of any OECD country bar Greece on roads, and, unlike in Germany, rail improvements are concentrated in the capital. What’s needed are links between northern cities, rather than ever-quicker trains to London. None of this comes cheap: Berlin has invested £2trn in addressing regional imbalances. But it works. Three decades after the “economic shock of reunification”, the gap between East and West Germany is smaller than it is in the UK between the South East and the rest of the country. “That’s real Levelling Up, not just talking about it.”