Arc of Prosperity

Scottish Independence within the EU – with a Scandinavian Slant


Focusing on London

233/365 Washed Up
233/365 Washed Up, a photo by thebarrowboy on Flickr.
There’s an interesting article by Larry Elliott in The Guardian today.

He neatly sums up why Margaret Thatcher was a disaster north of the Severn-Wash line but a huge success south of it:

In the 1930s, the centre of gravity of the British economy shifted to the south-east. […] Manufacturing jobs had peaked in the mid-1960s and the workforce had shrunk by a million. Britain’s industrial competitiveness had been impaired in the 1970s by high inflation, offset by a lower exchange rate. But the first two years of the Thatcher era were a veritable bloodbath. Industry faced a quadruple whammy: higher oil prices; an appreciating foreign exchange rate courtesy of sterling’s emerging status as a petro-currency; rising inflation caused by a doubling of VAT and high pay claims; and sky-high interest rates deemed necessary to reduce the growth in the money supply.

[Then there] was the big bang in the City. This accelerated the economy’s transformation away from manufacturing towards the service sector and the financial services sector in particular. The government’s thinking was that it made sense to exploit the size and international reputation of the City, because this was a sector in which the UK had a comparative advantage.

In other words, Mrs. Thatcher accelerated a process whereby economic activity was moving from north-west to south-east. A more sensible government might have tried to create more economic activity in the struggling parts of the country, but instead they decided to concentrate on the areas that were already doing well.

Larry Elliott continues:

The economy’s structure means that the growth sectors when it recovers are […] likely to be financial services, professional services and communications, digital and media. All three are concentrated in London.

So basically, because a large list of UK governments allowed the economy to shift gradually towards Greater London, this pattern has now been set in stone because all growth will by default happen there.

The future governments of an independent Scotland will certain not just give up and allow the economy to shift to London. It will do its utmost to create economic activity in Scotland.

I just feel sorry for the people of Northern England — they really could use independence from London, too!

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