Government must invest in northern infrastructure and raise productivity, says KPMG

KPMG’s latest quarterly Economic Outlook predicts ‘modest growth’ for the UK post-Brexit and says lack of transport and digital investment was holding back the north. Tony McDonough reports

Lime Street station
Lime Street station Liverpool. The north needs more transport investment, says KPMG Picture by Tony McDonough

 

Investment in infrastructure and technology is as crucial as a good deal on Brexit if Merseyside and the north of England is fulfil its economic potential, a new reports says.

Accountancy firm KPMG has published its latest quarterly Economic Outlook report and predicts “modest growth” for the UK over the next couple of years if a relatively friction-free deal can be struck with the EU.

Digital skills

But the study adds that northern England and the much talked about Northern Powerhouse needs to up its productivity if it was to benefit post-Brexit and investment in infrastructure and digital skills was key to any improvements.

Politicians and business leaders have long argued that the English regions are too often behind London in the queue when it comes to infrastructure investment, particularly when it comes to rail.

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A summer of cancellations and delays on rail services across the north of England has put the issue into sharp focus. There was irritation earlier in the year when the Government committed to Crossrail 2 for London with similar commitments for the north of England.

Core issues

Chris Hearld, northern chairman at KPMG UK, said: “The challenges raised by our UK Economic Outlook report are particularly relevant in the North where productivity remains one of the core issues preventing the region from reaching its growth potential.

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“We believe that investment in new technology, alongside building a skills base to embrace digitisation, will be fundamental to solving that puzzle and will help make sure that the economy is competitive post-Brexit and long into the future. 

“The North’s own regional strategy will need to mirror the major themes of the UK Industrial Strategy around innovation, people, infrastructure, business environment and communities. For the region to push on for life outside of the EU, we need to see a concerted effort across all levels of the economy to deliver against those ambitions.

Chris Hearld
Chris Hearld, northern chairman at KPMG UK

 

More support

“As a priority, there must be stronger national government support for infrastructure investment that can bring more people together, faster, while local government has to capitalise on its devolved powers to create an environment that will foster business growth.

“As for businesses, they have their own responsibility to embrace new technologies to drive regional productivity and maintain the nation’s competitive edge in international markets.”

KPMG predicts that UK GDP will grow by 1.3% in 2018 and 1.4% in 2019. This will mark the lowest rate of growth since 2008 and 2009. These figures are based on an assumption that the UK government will achieve a relatively friction-free Brexit and transition deal.

If a disorderly Brexit were to occur, KPMG predicts a rapid slowing of growth to 0.6% in 2019 and 0.4% in 2020. 

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