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The shrinking economy will not affect every part of the United Kingdom in the same way or at the same speed. National statistics will record falling prosperity, weakening tax revenues, declining discretionary employment and increasing pressure on public services. But these national figures will conceal a much more varied process taking place within individual localities.

Some localities will continue to grow, at least in terms of population, food production, practical employment and social cohesion. Others will shrink rapidly. Some may become extremely poor, while a smaller number retain considerable wealth. Between these extremes will be many places undergoing repeated adjustment as people, skills and resources move in response to changing conditions.

This will not be a planned redistribution directed from the centre. It will be an evolutionary process.

National shrinkage will not be evenly distributed

Economic shrinkage is usually discussed as though it will descend uniformly upon the country. National output falls, real wages decline and public expenditure becomes less affordable. It is then assumed that every household and every place will become proportionately poorer.

That is unlikely.

The national economy is an aggregation of very different local economies. Some depend heavily upon discretionary spending, long supply chains, commuting, tourism, financial services or government expenditure. Others possess productive land, water, woodland, workshops, useful buildings and people with practical knowledge. Some have strong social connections. Others consist largely of isolated households whose relationships are mediated through employers, public agencies and commercial services.

As the formal economy contracts, these differences will become increasingly important.

A locality that loses a large office employer may experience an abrupt fall in money incomes. Shops may close, house prices may fall and tax receipts may decline. Yet if the locality has access to land, practical skills and a willingness to reorganise, it may gradually replace some of the lost formal activity with food production, repair, care and small-scale manufacturing.

Another locality may initially appear prosperous because its residents have accumulated pensions, investments and valuable property. But it may lack food-producing land, water, affordable housing and people capable of maintaining its physical systems. Its monetary wealth may disguise a deeper dependence upon distant supplies and outside labour.

The real strength of a locality will therefore not be measured simply by the amount of money circulating within it. It will be measured increasingly by what it can provide for itself.

Growth within shrinkage

The United Kingdom can shrink while particular localities grow. This is not a contradiction. It depends upon what is meant by growth.

A locality may experience falling financial turnover while increasing its production of food, firewood, clothing, tools and essential services. It may have fewer supermarkets but more market gardens. It may have fewer professional care companies but more people providing care within families and neighbourhoods. It may have fewer new products but much more repair and reuse.

Such a locality would be shrinking according to conventional economic measurements. Yet its ability to support its inhabitants could be increasing.

Local growth in a shrinking national economy will not resemble the growth of the industrial age. It will not necessarily involve rising consumption, expanding credit or increasing house prices. It will mean the growth of useful activity.

There may be growth in:

• local food production;
• the number of people engaged in practical work;
• repair and maintenance;
• shared equipment;
• small workshops;
• household and locality energy production;
• woodland management;
• care provided close to home;
• informal exchange;
• apprenticeships and the transfer of skills;
• relationships of trust and mutual obligation.

This activity may not be fully captured by Gross Domestic Product. Some of it may not involve money at all. But it will determine whether a locality is merely becoming poorer or is becoming more self-reliant.

National shrinkage may therefore be surprisingly difficult to see in the more successful localities. People will know that imported goods are less available, that travel is more expensive and that national services are deteriorating. Yet everyday life may remain tolerable, and in some respects improve, because essential needs are being met more directly.

People may have less money but more useful work. They may buy fewer prepared foods but have better access to locally grown produce. They may travel less but know more of the people around them. The economy will have shrunk, but life will not necessarily feel like continuous decline.

De-layering the local economy

This process can be understood as de-layering.

The formal economy has inserted numerous layers between the person who does useful work and the person who benefits from it. Social care provides a good example. The person receiving care pays, directly or through taxation, for much more than the time of the carer. The cost may also include management, regulation, property, transport, finance, debt servicing and profit.

The same is true of food. The price paid by the consumer includes processing, packaging, advertising, distribution, refrigeration, supermarket property, finance, management and profit. Some of these functions are necessary within the present system. But many do not produce food.

As energy and financial resources become less affordable, these layers will contract. The process may be disorderly, but it will encourage a shorter relationship between production and use.

Food grown close to where it is eaten requires fewer layers. A person caring for someone nearby does not require a national company to organise every hour of assistance. A local craftsperson repairing an implement avoids the energy, materials and finance required to manufacture and distribute a replacement.

The successful locality will not preserve every feature of the formal economy. It will retain the useful core while shedding unaffordable complexity.

Migration as a judgement upon localities

Population movement may become one of the clearest signs of how individual localities are coping.

People have always moved towards places offering food, work, shelter and security. During the era of industrial expansion, this generally meant movement towards towns and cities where monetary employment was concentrated. In a shrinking economy, the direction of movement may become less predictable.

Some towns will continue to attract people because they possess housing, workshops, markets, rail connections and established institutions. Some rural localities will attract people because they offer land, water, food production and practical work. Other places will lose population because they cannot provide affordable essentials.

Emigration from a locality will be a visible judgement upon its conditions. Immigration will often indicate that people believe they can establish a tolerable life there.

This judgement will not always be correct. A place may attract newcomers because it appears wealthy, only for its dependence upon external supplies to become apparent later. Another may lose young people during a period of severe difficulty, even though its land and resources give it good long-term prospects.

Movement will also be constrained. Poor people may be unable to move. Wealthier households may retain homes in attractive places while obtaining their essentials from elsewhere. Older people may remain because of family connections or because moving is physically impossible. Population movement will therefore be an important measure, but not a perfect one.

Over time, however, the movement of people will help shape the new local pattern. Skills will move as well as numbers. A locality that attracts growers, builders, carers, mechanics and craftspeople may strengthen itself. A locality that drives such people away through high housing costs or lack of access to land may become weaker, despite retaining substantial financial wealth.

Localities of wealth and poverty

National shrinkage will not abolish inequality. It may initially increase it.

Some localities will contain large concentrations of property, savings and political influence. They may be able to secure scarce supplies for longer than poorer places. They may employ people from outside to maintain their houses, gardens and personal care. For a time, they may seem insulated from the national decline.

But wealthy localities will face a fundamental question. Are they merely places in which wealthy people live, or are they functioning communities capable of providing essential goods and services?

A locality of expensive houses but few workers cannot sustain itself. If carers, growers, cleaners, builders and repairers cannot afford to live there, its financial wealth becomes a claim upon labour imported from elsewhere. As transport and energy costs rise, that arrangement becomes increasingly fragile.

Poorer localities will face different problems. They may contain unemployed people, derelict land and empty buildings, yet lack the finance and organisation needed to bring them together productively. Their poverty may be severe even when useful resources are physically present.

The decisive issue will be access. Who may use the land? Who may occupy empty buildings? Who owns the tools? Can people obtain the small amount of capital needed to begin producing? Are local rules designed to enable useful activity, or do they protect arrangements inherited from the age of growth?

Extreme local poverty will not always result from a complete absence of resources. It may result from the inability of people to gain access to them.

Homelessness during the breakdown of the formal system

Housing may reveal one of the most painful contradictions of the shrinking economy. People may become homeless even while houses and other buildings stand empty.

The formal housing system depends upon wages, mortgages, rents, property values, credit and state support. As discretionary employment contracts, increasing numbers of people may be unable to maintain rent or mortgage payments. They may lose their homes before any alternative local system is ready to receive them.

This could create a period of severe but temporary poverty.

Someone expelled from the formal economy may have no recognised job, little money and nowhere secure to live. Yet that same person may later become essential to a local food system, care network, building group or repair workshop. The difficulty is the interval between the loss of the old livelihood and the creation of the new one.

Grass-roots food systems cannot appear overnight. Land must be made available. Soil must be improved. Tools, seeds and knowledge must be obtained. Growing has to follow the seasons. Storage and distribution must be organised. People accustomed to specialised formal employment need time to learn different skills.

During this interval, destitution could exist alongside the early stages of local renewal.

Homelessness should not therefore be interpreted as evidence that people have become unnecessary. It is evidence that the formal system has discarded them before the emerging system has found a way to use and support them.

This is where a continuing national core and functioning local institutions will be vital. Temporary shelter, basic food, healthcare and access to land can prevent a period of disruption from becoming permanent exclusion. The object should not be to preserve every feature of the failing formal system. It should be to keep people alive, sheltered and capable of taking part in the new one.

The danger of failed localities

Not every locality will evolve successfully.

Some may be trapped by poor land, water scarcity, contaminated sites, unsuitable buildings or isolation from transport. Others may possess adequate physical resources but lack cooperation. Powerful owners may prevent access to land and buildings. Existing groups may exclude newcomers. Crime, intimidation or political conflict may prevent productive activity.

A failed locality may enter a downward spiral. Useful people leave. Essential services deteriorate. Property is abandoned. Those who remain become older, poorer and less able to restore the physical fabric. Food and energy must still be brought in, but the locality has less to offer in exchange.

The national government will not have the resources to rescue every place by recreating former patterns of employment. Nor can it design a uniform local economy from the centre. It can, however, maintain the framework within which local recovery remains possible.

This includes basic law, defence, a workable currency, intercity rail, telecommunications, specialist healthcare and a minimum system of income or essential provision. It may also require measures preventing usable land and buildings from remaining idle while people lack food and shelter.

The purpose of national government in a shrinking economy will increasingly be to preserve the conditions for local evolution.

Local success will have different forms

There will be no single model of a successful locality.

A rural locality may depend upon mixed farming, woodland, village workshops and small food-processing businesses. A market town may serve as a centre for exchange, repair, healthcare and education. A former industrial town may reuse its terraces, railway connections, warehouses and workshops. Parts of cities may reorganise into closely connected urban localities, using allotments, markets, repair centres and shared services.

Each will develop according to its geography, buildings, history, people and natural resources.

This is why localism cannot be delivered as a standard national programme. Government may enable it, but it cannot prescribe its detailed form. The process will involve experiment. Some arrangements will work and be copied. Others will fail and be abandoned.

Successful localities will also exchange with one another. Localism does not mean complete self-sufficiency. Few places can provide everything they need. The aim is to shorten essential supply chains and reduce dependence upon complex systems, not to eliminate trade.

A food-producing locality may exchange with a town possessing workshops and medical facilities. Woodland localities may supply timber and charcoal. Coastal localities may provide fish. Railways and waterways may connect these different economies using less energy than the present road-based distribution system.

The national economy will become less uniform and more like a network of distinct but connected localities.

A new measure of prosperity

The success of this evolution cannot be judged primarily by house prices, retail sales or financial turnover.

A prosperous locality in the shrinking economy will be one in which ordinary people can obtain food, shelter, warmth, care and useful work without depending upon long and fragile chains. It will retain skills, support children and older people, maintain its buildings and land, and produce enough of value to exchange for what it cannot provide itself.

Its inhabitants may own fewer consumer goods. They may travel less and have lower monetary incomes. Yet they may be more secure than people living in apparently wealthier but highly dependent places.

The most important division may no longer be between nationally rich and nationally poor. It may be between localities that can evolve and those that cannot.

Evolution rather than a master plan

National shrinkage is already beginning to weaken the systems built during the age of cheap energy and expanding credit. The consequences will not follow a neat timetable. Neither will they be identical throughout the country.

Localism will emerge unevenly. It will advance where necessity, resources and human cooperation come together. It will falter where access is denied, practical knowledge has been lost or social relationships have broken down.

There will be periods of hardship. People may lose formal employment and housing before new local systems are sufficiently developed. Some localities will become much poorer, while others retain wealth or discover new forms of material security. Migration will increasingly reveal which places offer a viable future.

But national shrinkage does not require every locality to experience unrelieved decline. Within the contraction of the formal economy, there can be growth in food, care, repair, skills, cooperation and genuine usefulness.

This is the central possibility offered by localism. A country may become financially poorer while many of its localities become more capable of meeting human needs. What appears from the centre as national economic decline may be experienced locally as adaptation, simplification and renewal.

The future will not be distributed evenly. It will be made, locality by locality, through the evolutionary response of people to the condition