Regional inequalities in the UK are
large by international standards. Three
new research papers written by researchers
at the IFS, UCL, Manchester University and
other universities, and published in a symposium issue
of Fiscal
Studies, examine the scale
and sources of these inequalities. A new IFS
briefing summarises the research and policy
implications.
Taken together, the papers suggest
that policies to reduce regional inequalities need to tackle
multiple, interlocking constraints at the same
time. Daams, Mayer and
McCann (2025) show
that, following the 2008 financial
crisis, investors began to see London as much safer to
invest in than the rest of the country, demanding much
higher returns to invest in the UK's second- and
third-tier cities and limiting access to
credit there. Xu
(2025) shows that the flow
of skilled workers further widens regional disparities, with
highly educated young people moving away from places with weaker
economic opportunities towards cities offering better
prospects, especially London. Carneiro et al. (2025) show that educational quality is likely to be
important: young people who grow up in poor neighbourhoods in big
regional cities have particularly poor labour market outcomes,
partly explained by low educational attainment in inner cities
outside London.
Xiaowei Xu, a Senior Research
Economist at IFS, said:
‘The new research highlights why
tackling regional inequalities is so challenging: the
disadvantages faced by left-behind places are interconnected and
self-reinforcing. Weak access to investment, limited local job
opportunities, low educational attainment and the out-migration
of skilled workers can trap places in cycles of low growth.
The broad lesson is that policy needs to tackle multiple,
interlocking constraints at the same time, pointing to the need
for place-based, coordinated
approaches.'
ENDS
Notes to Editor
Tackling regional inequalities:
lessons from new research is an IFS briefing by Sonya
Krutikova and Xiaowei Xu.
The briefing, including
links to all three papers, is available to read here on the IFS
website
