Henry G Manson looks at a key GE2105 region where the recovery is slower
Many ask if â€˜the UK economyâ€™ will recover before the general election? One thing thatâ€™s struck me in recent weeks is how different parts of the country are already faring quite differently to each other. As a result there is the growing chance that areas like London and the South East pick up by 2015 but that they leave behind large parts of the North and Midlands. Thatâ€™s got to have some political consequences.
Yesterday Standard and Poorâ€™s published research showing that 1 in 7 home owners in the north west are currently in negative equity, compared to 1 in 100 in the south east. Their report said:
“Diverging regional house prices mean that the proportion of borrowers with low equity has continued to rise in the north, while it has fallen in southern regionsâ€¦Given the buoyant London property, and further public sector job cuts, which could disproportionately affect the north, we expect that the regional divide in mortgage risk will persist in the coming quarters.”
The Guardian has also calculated that take home pay in the North West is down by over 10% since 2007. This is more than any other part of the UK and more than twice the drop in London or the East region.
Thereâ€™s been a little soul searching quite recently on how the Conservatives can broaden their appeal beyond the leafy Shires in the south. Iâ€™ve mentioned previously the importance of the work of new northern advisor David Skelton in this field. But if areas of the north west are struggling when other areas as doing well, itâ€™s going to make the Conservative attempts to win seats here that bit harder.
Thereâ€™s also a real danger that government ministers and the press grab at some green shoots in the south, generalise and as a result antagonise people in areas of the north that are not recovering. If youâ€™re one of those 1 in 7 north west home owners in negative equity and pick up on the differences around the country, then Labourâ€™s â€˜one nationâ€™ message will surely chime more than the Conservativeâ€™s â€˜weâ€™re all in this togetherâ€™.
There are a reasonable number of seats with modest majorities in the north west. Seats like Lancaster and Fleetwood (333), Morecombe & Lunesdale (866), Weaver Vale (991) and Warrington South (1553) are hanging by a thread. Those MPs with majorities up to 5 or 6,000 wonâ€™t be sitting comfortably and may find the economic picture in their patch is what does for them. They include Tory versus Labour battles in Blackpool North, Bury North, Carlisle, Chester, Pendle, Rossendale and Darwen and South Ribble.
George Osborne will be looking to use his Comprehensive Spending Review to squeeze out any growth he can and look forward to the prospect of some improvement in living standards in the run up to the election. But unless itâ€™s spread up to areas such as the north west, then David Cameron could pay the political price.