Spatial inequalities in UK GDP per head: The role of private and public services

Abstract

This paper examines the impact of private and public services in generating spatial inequalities in GDP per head across UK sub-regions. The research utilises new data on public services available from Experimental Government Accounts. After reviewing the theoretical and empirical evidence concerning the spatial impact of services, an econometric model of the determinants of GDP per head is estimated. The results suggest that private services, public services and population structure have a significant influence on spatial inequality. For public services much of the impact is related to the strong concentration of such services in London. It is argued that spatial factors must be given explicit consideration in major public policy decisions if spatial inequalities are to be tackled.