Signs Are Positive for Region's New Dawn; the Liverpool Macroeconomics Group Today Publishes Its Survey of the Prospects for Merseyside, Cheshire and North Wales. Its Author Is Professor Patrick Minford
Byline: Patrick Minford
WITH the UK economy continuing to show growth in GDP for the 14th consecutive year, the prospects for Merseyside's economy continue to be positive, a fact consistent with the findings of our latest survey in the Merseyside and North Wales Economic Review.
Our panel survey published today, and associated forecasts, are generally optimistic over all-time horizons up to 2010. Prospects for Merseyside's growth compared to the UK have improved, and capital investment plans remain buoyant.
People locally are expecting a new dawn to break on the back of the accolades of European Capital of Culture status for Liverpool as well as the city's designation as a World Heritage Centre.
There have indeed been some very positive developments: Liverpool John Lennon Airport continues to grow with Easyjet's recent announcement of new destinations' Liverpool One shopping development, at nearly pounds 1bn of investment, is easily the biggest single investment in local retail infrastructure ever. It is on track for completion in 2008, Capital of Culture year.
Kings Dock waterfront development should see a much-needed arena plus conference centre in place by then too' building works are evident nearly everywhere in Liverpool, some of it skywards and some on the level, and all of it telling a positive story - even one of the local football teams has chipped in with success in Europe.
There have been significant successes elsewhere in business, such as the pounds 40m contract secured by Rolls-Royce at its Netherton base for the supply and servicing of offshore drilling equipment for the Brazilian national oil firm Petrobas. Airbus at Broughton is making a huge success of its role in the manufacture of the new A350 passenger aircraft.
The Audit Commission's recent star ratings of all Merseyside and Cheshire local authorities were invariably good. The list of such positives is long. Little wonder that expectations have been raised for a bright future throughout Merseyside and its hinterland of Cheshire and North Wales.
A common theme running through these positive signs is that they have been driven largely by market forces. The public investment projects like Kings Dock are responding to perceived market needs and demand. Similarly, success in business reflects an appropriate response of supply capabilities to meet demand requirements.
This simple equation of supply reacting to demand provides the key to prosperity by virtue of its realism. The equation is called market forces and, provided it is allowed to function, prosperity is guaranteed. In the language of economics, success means improved productivity, lower unemployment, higher employment and higher economic growth.
A note of caution should be added to this analysis, namely that market forces may need to be kept in check in order to preserve rights to a variety of human benefits, such as freedom from environmental pollution and access to privacy. Consequently, planning laws are a necessary feature of a civilised society.
The key question is the extent to which market forces should be restrained in particular situations because there is a danger that planning restraints may actually impede the attainment of higher prosperity rather than prevent market abuses, a case of "cutting off one's nose to spite one's face". This question has special relevance to Liverpool currently because there is so much development either in process or at the planning stage.
Thus, we have seen recent examples of planning applications for sizeable investments in skyscrapers turned down at Brunswick Dock and elsewhere for reasons which seem at best opaque, and at worst incomprehensible. We read in Liverpool Council minutes last year that no supercasinos would be allowed in Liverpool, notwithstanding that the area in northern Liverpool is near a possible site that has the largest Index of Multiple Deprivation measure in the whole of Britain. …