The chancellor needs to prioritise resilience
This article first appeared in the LGC daily briefing.
Ahead of the Spring Budget, Joe Sarling makes the case for a new economic vision with resilience at its heart.
The Spring Budget is likely to be a relatively vanilla affair. While there may be news of slightly better-than-expected economic performance, lower national borrowing levels alongside stronger tax receipts, and greater fiscal headroom, it is unlikely that the chancellor will provide big spending commitments. After all, the more substantial political payback for spending would come a bit closer to a general election – all eyes will be on the Autumn Statement later this year. Nonetheless, expectations are that on Wednesday we’ll hear announcements relating to cost-of-living support, public sector pay, and fuel duty.
What we are likely to hear little about is resilience. But this will be an oversight that reflects a wider Westminster blind spot. If previous economic cycles are a guide, we are due a significant recession as the economy limps its way back to pre-Covid levels. More pressingly in the short term, economic inactivity is now being driven by those facing long term sickness at the same time as health provision is creaking and councils’ ability to provide much needed community services continues to get squeezed.
To build resilient places in a post-Covid, post-Brexit world requires a strong local public sector and that of course requires the very investment of which it has been starved.
If it hasn’t reached it already, it feels like the ability of our public services to keep our economy functioning is at breaking point. To build resilient places in a post-Covid, post-Brexit world requires a strong local public sector and that of course requires the very investment of which it has been starved.
But building resilience is also about the need for a new economic vision. A recent influential research paper showed that places with more integrated and embedded local businesses (local economies with businesses that have strong ties to both local buyers and local supply chains) were more resilient to the global financial crash in 2008. This is important for both national and local policy – a stronger and more holistic focus on local economic systems and greater spending autonomy for councils helping to shape and support their economies.
…it isn’t too late to build the necessary foundations for thriving places today that could then be expanded ahead of future headwinds tomorrow.
It might mean that we trade a bit of growth for a bit of resilience. But it might also have wider spin-off effects such as greater pride in place and a sense of community connection across a local economy. It may be too late for the chancellor to realise this vision before the imminent downturn but it isn’t too late to build the necessary foundations for thriving places today that could then be expanded ahead of future headwinds tomorrow.
As we approach the end of the business cycle with public services at breaking point, now is the time to invest in those things that will help build local resilience and prepare for the shocks. The immediate economic problems vary greatly from place to place and so will require different local solutions and different local action. The best thing the chancellor could do is provide the necessary financial support and accompanying autonomy for places to overcome their challenges. But the opportunities for a new, more resilient economic vision lie at the local level too.
Shifting the policy focus and subsequent investment to enable places to build their economic ecosystems with resilience at the heart will help smooth out cycles and provide communities with a greater sense of stability. This is a long game but it should be the running theme of this and future fiscal events. The chancellor could start this next week – will he take the opportunity?
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