North of England ‘would rank second worst for investment’ in OECD country rankings

If the north of England were a country, it would be second bottom of a league table showing levels of investment in advanced economies, according to a report by a leading thinktank.

Only Greece has lower levels of public and private investment in a ranking of Organisation for Economic Co-operation and Development (OECD) countries compiled by researchers at IPPR North, the northern branch of the influential Institute for Public Policy Research.

The research, which aims to put the north’s situation in an international context, was revealed at Convention of the North, an annual gathering of political, civic and business leaders held in Manchester on Wednesday.

Marcus Johns, the report’s author, said the research showed the UK was standing out internationally for all the wrong reasons.

“Of all the advanced economies around the world, ours is the most regionally divided and getting worse – the north is at the sharp end of these divides and that’s a barrier to prosperity. But what’s even more unacceptable is that our country is divided by design. It is the result of decisions.”

Researchers have calculated overall levels of public and private investment in all 38 OECD countries.

Ireland is ranked top followed by South Korea, Turkey and Estonia. The UK is a lowly 35 in the list followed by Costa Rica (36), Luxembourg (37) and the imagined country of the north of England (38). Greece, still recovering from a sovereign debt crisis and its aftermath, is bottom.

The report attempts to quantify the extent of inequalities in the UK. For example, it says productivity is about £7 lower an hour worked in the north than the rest of England. Hourly pay is £1.60 lower.

Researchers used detailed case studies of places across the world that have successfully levelled up, showing how they have done it and what lessons can be learned.

They include Leipzig, the fastest growing city in Europe; Bilbao, a regeneration triumph that began with the opening in 1998 of the Frank Gehry-designed Guggenheim; and Ibaraki in Japan where productivity per worker is 61% higher than the north of England.

Zoë Billingham, the director of IPPR North, said this international evidence showed that levelling up came from governments letting go of power and collaborating positively with places. She called on political leaders to “zoom out” and learn lessons. “Our leaders need to think big and look beyond our borders for inspiration.”

Wednesday’s convention heard a demand for levelling up to be “hardwired” into UK law to ensure regions can close gaps in living standards, whether skills, wages or life expectancy.

The call takes its inspiration from Germany, where the constitution guarantees areas have equivalent living standards and strong political leadership.

Carsten Schneider, the minister for east Germany and equivalent living conditions, will address the convention by video. He said there were good reasons for putting it in the constitution. “If regions are drifting apart, it is bad for everyone, including for the growing regions,” he said. “If a variety of regions flourish, the whole country will prosper.”

“East Germany has seen long-term support and investment since the fall of communism – and it has worked. Cities in eastern Germany are now powering ahead of cities here in the north.

“Our own history has shown us that, too often, the north struggles to get to the top of the government’s to-do list – whichever political party is in charge. That’s why we need to hardwire levelling up into UK law and unlock the potential of the north to help the whole country thrive.”