Kalecki Centenary Lecture - The political economy of full employment in modern Britain

This paper examines the regional aspects of structural change and unemploym ent in the UK. Manufacturing decline has severely hit the industrial conurb ations of the North, Although reflecting long-run trends, this decline has been exacerbated by poor macroeconomic management. New service jobs have be en created but most of these are in the South. This growing North-South div ide is reflected in a southward drift of population. The extent of the nort hern decline is masked by government expenditures that help to maintain emp loyment in depressed areas. But this is only a temporary solution. As popul ation drifts away from the depressed areas, public expenditures will eventu ally be cut, causing further loss of employment and population in these are as. Using a simple export base model, the paper quantifies the underlying d ecline of the northern economy. In relative terms, this decline has been al most as fast in the 1990s as in the previous decade of industrial crisis.