Less and Less Favoured? Britain's Regions in the Energy Crunch

Recent pronouncements by the International Energy Agency suggest that the world faces a potentially very serious shortage of liquid oil in the next decade. Meanwhile, alternative sources of energy, fossil fuel or otherwise, are problematic for political, technical, or environmental reasons. This paper suggests that these developments may herald a fundamental change in the economic landscape—and one that will further widen the gap between wealthy and poor regions in the developed world, with poorer regions being very vulnerable to the difficulties associated with this change. The nature of the ‘energy crunch’ is presented, as are arguments that suggest the UK is less well prepared than other European competitors for increased energy costs and price volatility. The paper then presents data for GB regions, suggesting that upcoming energy challenges might herald an era of greater regional economic divergence.