Germany spending ten times UK on levelling up

The UK has been spending less than one-tenth on levelling up economically lagging regions like the North East compared with what Germany has been devoting to the equivalent process in its formerly Communist eastern regions, according to leading academics.

UK and EU spending since 1961 has been £4.9bn a year while Germany has been spending £55bn a year since the country was reunified in 1990, according to the calculation by Professor Ron Martin and Professor Pete Tyler of the Bennett Institute for Public Policy at Cambridge University.

These figures compare with an estimate on this website four days ago of £271m a year spent in the North East alone during the peak years of One North East, the regional development agency.

Martin and Tyler write:

‘Successive [UK] governments have failed to fully recognise the scale and importance of geographical economic inequalities. This has been reflected in the limited scale of financial resources devoted to solving the problem.

‘We estimate that from 1961 to 2020, there was an annual spend of £3.5bn, equivalent to 0.15 percent of 2020 gross national income (GNI). Regional aid from the European Union added around another £1.4bn (2020 prices) per annum.

‘In combination, then, spending on urban and regional policy has amounted to about £4.9bn per annum (0.27 percent of 2020 GNI). This is the size of the new Levelling Up Fund (which is not all new monies).  

‘It compares to £14.5bn spent on international aid in 2019. Even more striking, it compares with a massive €2 trillion of aid and assistance (approximately equal to £55bn per annum) Germany has spent since 1990 on its Aufbau Ost programme to level up the East Germany economy with that of West Germany, post-unification’.

To be clear, the £4.9bn referred to by Martin and Tyler as having been spent on urban and regional policy in the UK since 1961 is an annual amount; the £4.8bn Levelling Up Fund to which they compare it is spread over four years. There are other UK funds too which this website estimated could raise the total available to the North East to £237m a year. But this is still short of the amount spent by One North East, never mind in the East German regions.

*Levelling Up Left Behind Places: The Scale and Nature of the Economic Policy Challenge, by Ron Martin, Ben Gardiner, Andy Pike, Peter Sunley and Peter Tyler, was published by Routledge in December 2021. 144 pages paperback, 34 colour illustrations. ISBN: 9781032244303. £27.99