In the June 2023 roundup episode of LED Confidential, Mike and David discuss what it means for place leaders to be facing some of the fiercest price pressures in recent UK inflation rate history (listen from 1.00) How can they respond? Here’s a Q+A based on the episode.
What are the current inflation rates in the UK, and how are they impacting local economic development in 2023?
The unexpectedly unchanged May 2023 CPI inflation figure of 8.7% poses significant challenges for local economic development and placemaking. This is the highest, sustained inflation place leaders in the UK have seen since 1990. LED organisations are experiencing pressure on service delivery costs, investments, and borrowing due to high inflation and rising interest rates.
What challenges do local teams face in managing economic development amid high inflation?
Cash-limited funding cycles make it difficult to achieve the same outcomes with reduced funding. Delays can exacerbate inflationary problems. Additionally, the rising costs of operating departments add to the overall challenges faced by LED organisations, whilst, for instance, resisting rising labour costs can result in industrial relations issues that further augment delays.
How should local leadership teams respond to the inflationary trends? Are there variations across different regions?
They are responding by re-running budget forecasts, looking at how to reprioritise spend between core mandated services and other services; and exploring opportunities for collaborative procurement. The impact of inflation varies across regions, with factors such as the funding mix for services influencing the response of LED organisations.
How can LED and placemaking professionals stay informed about local inflation rates and relevant indices?
LED and placemaking professionals’ understanding of local variations in price pressures will improve informed decision-making. While the Office for National Statistics (ONS) provides a range of indices, they do not offer specific commentary on local variations. Therefore, just like policymakers at the Bank of England (see its useful inflation calculator), LED professionals should seek out locally-generated measures of price pressures where they can, such as information on property prices and the Quarterly Economic Surveys published by Chambers of Commerce, which give insights into how local business experience compares with the national average.
Is there a need for better reporting on local inflation variations? How can differentiation in the cost of doing business across regions be beneficial?
Improved reporting on local inflation variations would be beneficial. Differentiating the cost of doing business based on factors like supply-chain costs and regional inflation rates could become a mainstream aspect of place marketing collateral. Similar points can be made about cost of living, housing, and other issues important for local dynamism. The more comprehensive our understanding of the cost landscape and its variation from national averages, the better our planning and management of LED and placemaking is likely to be.
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