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COVID-19 and Brexit could compromise levelling up agenda – IFS

The Government’s levelling up agenda could be compromised by economic disruption from COVID-19 and Brexit, according to new research from the Institute for Fiscal Studies (IFS).

The UK ranks at or near the top of international league tables on economic inequality between regions, making it one of the most regionally unequal countries in Europe.

According to the IFS, there is a danger that this could worsen in light of economic disruption related to the end of the Brexit transition period.

This is because areas dependent on manufacturing and with high concentrations of less-educated workers, such as the North of England, South Wales and the West Midlands, will be highly exposed to any kind of disruption resulting from a Brexit deal, or lack thereof.

By contrast, there is no systematic relationship between the areas that are most left behind on measures such as pay, employment, education and disability and the areas that have experienced the worst short-term economic impacts from the coronavirus pandemic.

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 IFS report also found that while local authorities facing the worst short-term economic effects from COVID-19 were generally not those that were already ‘left behind’, there were some exceptions, including in the North East.

For instance, the centres of places like Liverpool, Newcastle, Glasgow and Dundee face the ‘double whammy’ of being both left behind and vulnerable to the immediate economic fallout from the pandemic.

Mark Franks, director of welfare at the Nuffield Foundation, said: “Successive governments have struggled to translate aspirations to alter the distribution of growth and prosperity across the UK into economic or social reality.

“The impact of Brexit and COVID-19 only add to the difficulty and complexity of this task by exacerbating some existing inequalities and bringing new ones to the fore.”

Alex Davenport, research economist at the IFS and an author of the report, added: “The government needs to set out what it intends to achieve through “levelling up”, where it wants to target support, and how.

“This already complex and difficult task will only be made more complicated by Brexit and the COVID-19 crisis.”