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The Chancellor's mantra "invest, invest, invest" has the key aim of delivering economic growth and stability. Indeed, the º£½ÇÊÓƵ has suffered from the lowest investment in the major group of the world's seven developed economies (known as G7): in 2024, like in the past nearly three decades, investment as a whole (or gross fixed capital formation) stood at merely 18% of the º£½ÇÊÓƵ Gross Domestic Product (GDP) – .

Productivity in the North West is lagging behind other regions and the national average, which, in turn, is surpassed by other advanced economies (see Smith et al., 2018). Research-based reports, such as those published by the University of Central Lancashire, outline ideas from academic studies which try to identify the factors that contribute towards productivity and economic growth. Among economists there is a clear view that low investment, especially historically, is damaging the prospects of the future generations. This comes in the wake of the º£½ÇÊÓƵ's unresolved country-wide productivity puzzle: hard to explain low economic growth as of the year 2008 (see Haldane, 2017).

The NW faces several specific economic challenges, including:

• Industrial decline. Historically reliant on manufacturing, some areas have struggled with the decline of traditional industries, leading to job losses and economic stagnation.
• Regional disparities. There are significant economic disparities within the region, with urban areas like Manchester and Liverpool experiencing growth, while more rural or post-industrial areas lag behind.
• Low wages. Many jobs in the NW tend to offer lower wages compared to the national average, contributing to more severe rates of in-work poverty and child poverty.
• Skills mismatch. There is often a mismatch between the skills of the local workforce and the needs of employers, particularly in emerging sectors such as technology and advanced manufacturing. The area faces losses in labour market supply, with many graduates emigrating to work outside the NW (see Whyman and Petrescu, 2019), a lower job density that the national average (the ratio of total jobs to the total population aged 16-64 years old), and a need of measures to support job creation.
• Transport and infrastructure. While some NW cities have benefitted from investment, others still face challenges related to transport connectivity, affecting business efficiency and accessibility.

• Public sector dependence: Many NW areas rely heavily on public sector employment, making them vulnerable to cuts in public spending or changes in government policy. For example, budgets in the Higher Education sector have suffered following previous government's migration policy changes that reduced international student numbers.
• Housing affordability: In urban areas, rising housing costs can create affordability issues, particularly for low- and middle-income families.
• Youth unemployment: Certain parts of the NW region face higher rates of youth unemployment, indicating a need for better job opportunities and training programs.
• Lower levels of life satisfaction: The Office for National Statistic (ONS), the main authority in this field in this º£½ÇÊÓƵ, has been tracking life satisfaction rates across various º£½ÇÊÓƵ regions, and the NW has some of the lowest levels in 2022-2023, including in Hyndburn and Liverpool (see ONS, 2023). Economic well-being and life satisfaction are significant indicator of a region's prosperity and outcomes; some could argue that these indicators outshine traditional economic measures such as GDP.

Addressing these NW challenges requires targeted policies and investment to stimulate economic growth and improve living standards across the region. Several potential economic and social impacts that could arise for the NW from the Budget announced on October 30 are as follows:

• Public spending: The Budget increases funding for infrastructure and some public services (NHS, education, schools), and this could boost local economies, create jobs, and improve facilities. For instance, there shall be 2,000 new homes at Liverpool Central Docks; and an increase in the Sustainable Transport Settlements, which are funding projects such as Liverpool’s Baltic Railway Station (HM Treasury, 2024, pp. 67-8). Moreover, the Budget has featured good news of "day-to-day departmental spending at an average of 2.0% per year in real terms between 2023-24 and 2029-30 to support public services, including to deliver 40,000 extra elective appointments a week and reduce NHS waiting lists" (HM Treasury, 2024: 1). This is much needed, because the NW region has the highest population density outside London, and its aging population group raises concerns about the pressures that continue to be experienced by the NHS, schooling and other public services in the region. It is a positive insight to note, in fact, an overall trend in the Budget to shift the º£½ÇÊÓƵ economic model towards the Continental approach of the state having a higher stake in a nation's economy - in view of the NW economic profile being more heavily public-sector oriented, this shift should bode well for the NW.
• Investment in key sectors: The NW has strong manufacturing, technology, and creative industries. Targeted investments or incentives in these sectors could stimulate growth and attract new businesses. There is a need for creating jobs in high-productivity business sectors, implicitly to diversify the NW economy towards business activities with higher gross value added per worker. In this context, tt is welcome to hear about government plans for Barrow in Furness to play a role as part of the announcement of carbon-capture linked investment of £3.9 billion (HM Treasury, 2024:74). Elsewhere the Budget mentions sustainability, with investments in green technology and renewable energy that could create new jobs and support environmental initiatives in the NW region too. There is an announcement of a green paper being launched on the government's modern Industrial Strategy (HM Treasury, 2024, pp. 73-74), albeit the jury is out for now as to what this will mean in practice.
• Cost of living. Any measures addressing the cost of living - such as changes to taxes or support for low-income households - could directly affect disposable income and consumer spending patterns in the NW region. There is a welcome nationwide announcement in the Budget of 12 million low-income households on Universal Credit that shall be able to keep more of their UC award each month, and "700,000 of the poorest families with children will benefit as a result of this change" (HM Treasury, 2024: 43). A direct implication for the NW would be some relief for those low-income areas, such as in Liverpool and Blackburn, where in-work poverty and child poverty rates remain stubbornly higher than the º£½ÇÊÓƵ average. The gross disposable household income in the NW has been below England's average (e.g. a 15% gap, at £18.8k versus £22.2k in 2021 - see ONS, 2024b) and this regional disparity leads to a higher likelihood of economic disadvantages.
• Transport and connectivity. Investments in transport infrastructure could improve connectivity, facilitating trade and commuting, which would benefit both businesses and residents. The Budget does include promising initiatives, such as the commitment to deliver an upgrade to Transpennine Route rail line between York and Manchester (HM Treasury, 2024, pp. 68), but it is to be seen to what extent there is indeed a commitment to the Northern Powerhouse Rail, or a timely delivery of promises.
• Business support, a priority linked to education and skills in the labour market. The small business sector in the NW region will have needed more support for business investment such as to increase employee and managerial training. The marked, most significant Budget announcement of the employer national insurance contribution increase (to 15%, and to be paid from an almost halved per-employee threshold of £5,000 – HM Treasury, 2024: 3) may affect negatively the region's labour market. More targeted initiatives aimed at enhancing skills training and education could have helped address regional employment challenges and support the transition to a more skilled workforce, as well as reducing the brain drain from which the NW region suffers. Since the priority for NW businesses is economic growth too, support for investment in skills and training, access to markets and capital, and connecting with other business as part of business clusters, would have been needed in the Budget. Also known as agglomeration, clustering could create a shared base of resources, knowledge and mentors, alongside a common client base to lead to local growth (see Smith et al., 2018). There is support announced for the high-potential innovation cluster in Manchester (HM Treasury, 2024, p. 76 and p. 102), but more geographically-wide support would have been welcome.
• Regional disparities: The Budget could have included more targeted initiatives for helping disadvantaged areas catch-up with the national average, in order to help reduce economic disparities within the NW. It seems to be the case in this Budget that fostering a more balanced regional development has not been prioritised as much as addressing nationwide issues.

It would have been welcome to see in the current Autumn Budget more initiatives linked to access to how the NW region (and other regions) can obtain efficient resource allocation via planned spending on the NHS and other public services; increase their own (business) investment initiatives; grow more of, and hold on to their start-up, high-growth core business; attract and hold on to skilled workers; encourage business diversification; obtain support for research and development; access programmes for employee and management training, and, generally, increase awareness of best-practice methods that can enable their regional economies to grow, or, conversely, see the government reduce barriers to growth (e.g. lower business rates, offer cheaper finance, help with better infrastructure – roads, housing, broadband speed, benefit from less red tape).

Stimulating investment in training, new technology, research and development, and innovation can be achieved via increasing business confidence, via initiatives that lead to uplifting a nation's morale and spirit, and it is hoped that a Budget aimed at investment would deliver some of these goals in the North West region too.

References:

Haldane, A. (2017) ‘Productivity Puzzles’. Bank of England: London. Available via:

HM Treasury [Her Majesty's Treasury] (2024) The Autumn Budget 2024. Available online via . Released 30 October 2024. Last accessed: 30 October 2024.

Office for National Statistics [ONS] (2023) 'Life satisfaction in the º£½ÇÊÓƵ', Statistical Bulleting. Released 7 November 2023. Available online via: . Last accessed: 30 October 2024.

Office for National Statistics [ONS] (2024a) 'Business investment in the º£½ÇÊÓƵ: April to June 2024 revised results', Statistical Bulletin. Released 30 September 2024. Available online via: . Last accessed: 30 October 2024.

Office for National Statistics [ONS] (2024b) 'Local indicators for the North West', Statistical Bulletin. Available online via: . Last accessed: 30 October 2024.

Whyman, P. B. and Petrescu, A. I. (2011) 'Economic recession and workplace flexibility practices in Lancashire-based SMEs', Research Report, Lancashire Business School Workplace Flexibility Series, LIEBR, University of Central Lancashire, March, ISSN 2064-9276.

Whyman, P. B. and Petrescu, A. I. (2019) An Evaluation of Skills Drain from Lancashire. Report. Lancashire Institute for Economic and Business Research, Research Centre for Business Management and Enterprise, University of Central Lancashire. November.

Smith, S., Whyman, P. B., Petrescu, A. I., Wright, A. and Moon, V. (2018) Productivity in Lancashire – Sparking New Ideas. Executive Summary. Centre for SME Development. Report, University of Central Lancashire, October.

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