January 15, 2026
New research highlights entrenched UK regional inequalities and policy hurdles
New analysis from the Institute for Fiscal Studies (IFS) and partner universities suggests regional inequalities across the UK remain deep, persistent and shaped by a combination of economic, social and mobility factors, according to a symposium of research published this month. Researchers say disparities in earnings, productivity, educational opportunity and life outcomes continue to vary sharply between regions, with many places that were struggling two decades ago remaining comparatively disadvantaged today.
The studies, drawn from a Fiscal Studies journal symposium, point to several structural forces behind these long-standing gaps. One factor highlighted is the concentration of investment in London and the South East, which has widened financial risk premia – defined as the extra return investors require above the return on safe government bonds to compensate for risk – between the capital and other cities since the 2008 financial crisis. That divergence means investors require higher returns, or perceive higher risk, in many regional cities, reducing access to capital outside London.
Mobility patterns are also implicated. Graduate workers are highly mobile and tend to move out of weaker labour markets towards areas with stronger earnings prospects, particularly London and more prosperous parts of the South East. Researchers argue this migration reinforces disparities by draining skilled workers from regions with fewer opportunities.
The research also flags differences in equality of opportunity across places. In some areas, the influence of neighbourhood disadvantage on adult earnings is much larger than in others, reflecting uneven access to jobs, skills and pathways to higher-income work.
The authors argue that policy responses will need to address multiple barriers at once. Improving skills in disadvantaged areas without parallel job creation and better access to finance may have limited effect if local labour markets remain weak. The studies suggest more decentralised financial and governance systems could help, citing progress in places such as Greater Manchester and the West Midlands where devolved powers have begun to reduce investment risk differentials.
The findings come amid continuing debate about the UK’s regional divide, which remains among the widest in advanced economies and has been a recurring focus of place-based policy in recent years.
