The Economic Geography of the UK

Neil Coe, Andrew Jones, Neil Coe, Andrew Jones

• Publisher: SAGE Publications Ltd
• Year: 2010
• Print ISBN: 9781849200905, 9781849200899
• eBook ISBN: 9781446245583
• Edition: 1
• Topic: Physical Sciences
• Subtopic: Geography
• Index: Geography

With the UK still facing the repercussions of the 2007 economic downturn, Coe and Jones? text is a timely, engaging discussion of the key issues facing the UK economy from a purely geographical perspective, written by some of the leading academics in the field.

With pedagogical features to facilitate learning, including further reading and chapter aims, the text explores the complex connections that constitute the UK economy including the city and finance, the uneven development of the UK, the UK economy?s links to the European Union and its wider ties to the global economy.

Written for geography students studying modules on economic geography and the human geography of the UK, the text is a vibrantly written, easy-to-understand analysis of the current and future challenges that face the contemporary UK economy.

Includes a preface by Doreen Massey.

PART 1

SETTING THE SCENE:
UNEVEN ECONOMIC
GEOGRAPHIES

1

INTRODUCTION: THE SHIFTING GEOGRAPHIES OF THE UK ECONOMY?

Neil M. Coe and Andrew Jones

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AIMS

• To introduce the economic context and intellectual rationale for the book
• To profile the range of processes influencing the geography of the UK economy over the past two decades
• To explain the structure, style and approach of the book

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Twenty years on: re-engaging with the geography of the UK economy

As the 1980s drew to a close, the UK faced what appeared at the time to be a sudden and unanticipated economic crisis. After a severe recession between 1979 and 1982, the British economy had staged a spectacular – if partial and uneven – decade of growth. With Greater London and its financial service sector at the forefront, the Thatcher government had presided over the Big Bang in the City, a house price boom and the development of new information and creative industries (e.g. Hamnett, 1989; Hepworth, 1989; Thrift et al., 1987). Britain appeared to have, at least in part, shaken off the ravages of deindustrialisation and high unemployment, albeit at the expense of an ever widening North–South divide (Martin, 1988). But in 1989 all this came to an end as the economy plunged once more into recession. The then chancellor, Nigel Lawson, raised interest rates to almost unprecedentedly high levels in response to an overheated economy and inflation that threatened to run out of control.

Two decades later, and these events have a familiar resonance. By 2009 the UK economy was once again in the midst of a crisis, namely the worst economic downturn since the Second World War. Again, the boom of the 2000s appeared to have ended with the bursting of a bubble economy, this time focused on the banking sectors rather than the consumer credit flavoured boom of the 1980s. After a long Blair–Brown decade of growth and employment, by late 2009 the UK economy had contracted for a full year, unemployment had risen to over 2.4 million, and house prices had fallen 16 per cent since their 2007 peak (Guardian, 2009a, 2009b). However, perhaps most importantly, after initial focus on the financial sector it soon became clear that those hardest hit by the recession were young people, low-skilled workers, those employed in manufacturing or construction and those living outside of south-east England: in other words, the usual victims.

As far as the recent development of the UK economy is concerned, it seems, therefore, that many of the major trends continue to be cases of history repeating itself. Yet it is also clear that important things have also changed in the last 20 years. In 1989, globalization was a word barely on anyone’s lips, whereas now it is perhaps the major force that will shape the UK’s economic future. Equally the challenges posed by the need for developing a low carbon economy, along with the associated opportunities for growth, are a novel and unpredictable feature of the contemporary global economic landscape that the UK must engage with. The time for a book that re-engages with some of the longstanding questions about the UK’s economic geography in this changed world is thus ripe. The global economic downturn that began in 2007 posed a set of serious challenges for the UK economy, particularly given that the UK appeared to have been more badly affected than either other major European economies like France and Germany or leading Asian economies like China and even Japan. If the UK is to retain its position as one of the leading economies globally, then there is an urgent need to understand the current strengths and weaknesses in a wider global economic context that has changed significantly over the last two decades.

A second rationale for this book, however, is to plug a gap in the economic geographical literature that has emerged in the last 20 years. Economic geographers appear to have been diverted from the political economic approaches of the 1980s that produced a string of powerful contributions concerned with the uneven development of the UK economy and both its social and economic implications. Foremost amongst these contributions were perhaps John Allen and Doreen Massey’s edited book The Economy in Question (1988) and the associated Reader, Uneven Re-development: Cities and Regions in Transition (Massey and Allen, 1988). Written to support an Open University course, these textbooks sought to examine and explain the key questions of uneven development across the UK that had developed over the preceding 20 years since the economic turbulence of the early 1970s. At the time of publication, they represented influential contributions to a vibrant body of economic geographical literature concerned with the UK including books such as Hudson and Williams Divided Britain (1989), Lewis and Townsend’s The North–South Divide (1989) and Martin and Rowthorn’s The Geography of De-Industrialisation (1986). Our objective in this book is thus to reconsider the kinds of questions that The Economy in Question, Uneven Re-development and this political economic strand of economic geography addressed 20 years ago from the viewpoint of an economic geography that has arguably widened both its theoretical perspective and its understanding of what constitutes the economic realm. Next, we start to profile some of this economic and intellectual background in more detail, before moving on to outline the organisation and approach of the book.

Rethinking the economic geographies of the UK

We should start by explaining what we mean by the term the economic geography of the UK. Our use of the term in this book is twofold. On the one hand, it refers to the distribution of economic activities of different kinds across the UK and the underlying processes that produce those uneven patterns. On the other hand, it denotes another meaning – perhaps better thought of as the UK’s economic geography – which concerns the complex range of multi-scalar connections that constitute the UK economy. These relationships are not neutral but are inevitably about the exercise of power, control and dependency. This, then, is not the UK economy as a bounded space, but as a porous and open system that plugs into economic processes at other scales – most notably within the European Union and global economy (cf. Allen et al., 1998). In other words, it is about the UK’s position with the global economic system.

Both dimensions have changed significantly over the past two decades, as subsequent chapters will show. By way of introduction, we would point to six interconnected and overlapping sets of processes that have shaped the UK’s space economy in recent times. The list is not exhaustive, but does, we believe, capture the major dynamics at work. We can only give an initial introduction to these processes here – they will be discussed and evaluated in much more detail in the chapters that follow:

• Globalisation: The term globalisation captures the increasing functional integration of the global economic system, manifest in the intense but highly geographically uneven cross-border flows of goods, services, money, technology, knowledge and people between national economies (Dicken, 2007). As The Economist (2007: 4) describes, ‘Britain’s economy is one of the most open among the big rich countries’. Trade flows are a good indicator of such openness: in terms of merchandise trade, in 2007 the UK was still the eighth largest exporter in the world (US$438 billion) and the fifth most important importer (US$620bn). The resulting negative trade in goods of some US$180 billion is offset by a strong performance in commercial services trade; exports of US$273 billion in 2007, the second highest in the world, significantly exceeded imports of US$194bn, the third highest figure (www.wto.org, accessed 8/9/09). Flows of foreign direct investment (FDI) in and out of the UK are also extremely high, peaking at US$224bn and US$266bn in 2007 (UNCTAD, 2008).
• Financialisation: Central to the UK’s integration into the global economic system has been the ongoing financialisation of the economy. This can be seen in two senses: first the sheer size and significance of the financial sector; but second, in terms of the wider influence that it has over the rest of the UK economy. In 2007 the UK financial services industry provided employment for some 1 million workers and generated net exports of US$67 billion – the figure for the US by contrast was US$7bn – helping to offset the negative balance of payments on merchandise trade described above (IFSL, 2009a). In 2008, the UK – with the City of London by far the leading centre – accounted for 70 per cent of the world’s international bond transactions, 43 per cent of the over-the counter derivative market, 35 per cent of foreign exchange turnover, 18 per cent of hedge fund assets and 18 per cent of cross-border bank lending. Another salutary measure of London’s influence is that in October 2008, London was hosting US$1700 billion of foreign exchange trading every day (IFSL, 2009b).
• Tertiarisation: The UK’s development into a service economy continues apace. The rapid deindustrialisation that was identified in many studies during the 1980s has persisted: while in 1990 there were some 4.6 million manufacturing workers in the UK – already a dramatic fall from the 7 million of 1979 – by 2009 the figure had dropped to just 2.9 million (ONS, 2009). As a result, the shift to service employment or tertiarization of the UK workforce has also continued: while in 1989 services accounted for 70 per cent of total jobs, by 2000 the figure was 77 per cent, and by 2008, 81 per cent. In 2008, one-quarter of the service employment, or 21 per cent of the overall total, was accounted for by financial and business services, the fastest growing broad employment category in recent times (www.statistics.gov.uk, accessed 8/9/09).
• Flexibilisation: The UK labour market has for a long time now exhibited high levels of part-time and temporary working. In June 2009, there were 7.57 million part-time workers in the UK economy, or 26 per cent of the total – of these 1.89 million were men and 5.68 million were women. These figures intersect with 1.45 million workers, or 5.8 per cent of the total workforce, on temporary contracts. All these figures are very high when compared to other leading economies, particularly the proportion of temporary workers, and have slowly but steadily increased over the past two decades (ONS, 2009). While the relative flexibility of the labour market is argued to be attractive to businesses and inward investors, for a significant proportion of the workforce insecure employment has become the norm.
• Immigration: Although the UK has long been an important destination for migrants, immigration has become increasingly significant in economic and political terms. While in 1990 the number of international migrants in the UK was 3.7 million (6.5 per cent of the total population), by 2005 the figure was 5.8 million (9.7 per cent) and was predicted to rise to 6.5 million (10.4 per cent) by 2010 (http://esa.un.org/migration accessed 8/9/09). In terms of the workforce, by mid-2009 there were 3.7 million non-UK born workers in employment, accounting for 13 per cent of total employment (ONS, 2009). The accession of several East Central European countries to the EU in 2004 initiated an especially rapid and large wave of immigration of perhaps 1 million workers, with the majority coming from Poland on a short-term basis. The influx triggered a wide range of often highly-politicised debates about the social and economic costs and benefits of immigration, although the economic crisis lead to many European migrants returning home from mid-2007 onwards.
• Neoliberalisation: Underpinning the above processes has been a national political agenda that can broadly be construed as neoliberal, a path that was first chartered by the Thatcher administrations in 1980s and continued – to varying degrees – by subsequent Conservative and New Labour governments. Neoliberalisation is used as shorthand for a complex combination of policy trajectories including trade and financial market liberalisation, the privatisation of state assets, the promulgation of flexible labour markets and a scaling-back of direct state influence over economy and society (for more, see Tickell and Peck, 2003). Importantly, these processes should not always be taken as reducing the size of the state apparatus. While that was certainly true under Conservative rule in the 1990s – public sector employment fell from 23.1 per cent of total employment to a low of 19.2 per cent over the years 1992–99 – under New Labour public sector employment has expanded again somewhat, reaching a total of 20.7 per cent of the total, or 6 million jobs, by March 2009 (ONS, 2009).

The economic geographies resulting from the intersection of these powerful forces are many and varied, and can be analysed at different spatial scales. However, what is certain is that they have reworked and yet maintained the powerful structural and spatial inequalities within the UK economy that go under the broad sobriquet of the North–South divide (Amin et al., 2003). Equally certain is that the UK economy is now far more open to the vagaries of the global economy, and the financial system in particular, as was illustrated starkly by the speed with which bad debt in the US housing market precipitated the start of a deep recession in the UK economy in 2007–08.

The approach and organisation of the book

In this final section, we introduce the approach and structure that underpins this volume. The book that follows is not a factual compendium on the UK economy and its position in the world system. Neither is it a systematic and...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Acknowledgements
• Preface
• List of contributors
• PART I
• PART II
• PART III
• PART IV
• Index