Brexit and coronavirus could thwart Boris Johnson's plan to 'level up' UK, says IFS

Government needs to set out what it wants to achieve, report suggests

Boris Johnson spoke of his plan to level up" the UK in his first speech as prime minister. (REUTERS)

Boris Johnson’s plan to reduce economic inequality between UK regions could be hampered by the economic fallout from Brexit and the pandemic, a new study has said. 

This comes as the UK “ranks at or near the top of the international league table on most economic measures of inequality between regions”, according to the Institute for Fiscal Studies (IFS), the organisation behind the research.

The report said that there is a “danger” that the end of the Brexit transition period this year could thwart efforts by the government to “level up” areas that have been left behind.

The authors added that the regions most likely to be worst affected by Brexit-related economic disruption are those “dependent on manufacturing, and with higher concentrations of less-educated workers”, including northern England and south Wales.

The study also noted that in general these are not places that have seen the worst short-term economic impacts of coronavirus, complicating the government’s proposal to increase equality across the UK.

“This means that the most natural areas to ‘level up’ are not, in general, the same places that the Prime Minister might wish to target when ‘building back better’ post-COVID,” the report said.

However, the IFS reported that some places did face a “double whammy” of being both left behind and being especially vulnerable to the financial impact of Covid-19,  including coastal communities such as Great Yarmouth that are dependent on tourism and certain city centres in northern England and Scotland such as Liverpool and Glasgow. 

Expressing the complicated picture, Alex Davenport, a research economist at IFS who worked on the study, said: "The challenges faced by disadvantaged coastal communities like Blackpool and Margate are very different to those faced by isolated towns like Merthyr Tydfil, which are in turn different to those faced by large post-industrial cities like Glasgow.”

“The government needs to set out what it intends to achieve through “levelling up”, where it wants to target support, and how,” he added.

The study also suggested that the chancellor Rishi Sunak should not only think about investment spending but also spending on every-day services such as schools, which “may be as, if not more, effective”. 

Adequate funding should also be given to local governments to help achieve the government’s goal , the report added.