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By keeping money circulating in the local economy, we can create more jobs, support community cohesion and have a smaller ecological footprint.
Imagine the local economy as a bucket. If someone has £5 and spends it in the local grocers, the £5 stays in the bucket. But other activities, such as paying utility bills, or spending money in out-of-town stores, causes money to leak out of the bucket, away from the community. By plugging the leaks in the bucket, we can keep money flowing within community and create strong local economies.
The Local Economy Multiplier Effect, developed by the New Economic Foundation, suggests that every £1 spent with a local supplier is worth £1.76 to the local economy, and only 36 pence if it is spent out of the area. That makes £1 spent locally worth almost 400 per cent more than £1 spent at a non-local retailer. Supporting local businesses makes sense.
A thriving local economy increases resilience. Resilient communities are better placed to withstand changes in the global economy, flourishing even in the face of rising food and oil prices. Supporting local businesses, rebuilding local agriculture and food production, localising energy production, increasing local employment opportunities makes absolute sense. This will help strengthen our local economy, enhance our sense of community and help us become more resilient to change.
This section of our website is designed to provide as much local information as possible. The purpose of this Local Information Hub is to help our local community rediscover our local facilities, to enjoy our local environment, to use our cars less and to support our local economy. Please have a look around!
Thank you for this clear and concise note of the multiplier effect and the increased 'value' of that locally-spent £1. I was just composing a summary of Bread Matters' sustainable practices and thinking about the importance of local as well as seasonal and organic. Your page led me back to the New Economics Foundation website, where I downloaded 'The Money Trail', free of charge. Thank you, Tweedgreen.
Hi Veronica, Glad that you were directed by our site to further information on the local economy multiplier effect from the NEF. It's a very important issue that we need to inform people about, so we're delighted that you're also spreading the word.