The North-South economic divide could be narrowing, competitiveness statistics suggest. The big three southern regions of London, the South East and the East of England have shown falls in their competitiveness in the UK Competitiveness Index for the first time since the survey started in 2000, while the nine other regions have experienced a boost.

The largest improvements have come in regions that have been the least competitive, including Northern Ireland, Yorkshire, Wales and the North East. However, the improvements in the North and other regions were not strong enough to alter the rankings, with London retaining first place, followed by the South East, the East, the East Midlands and the South West.

Scotland rose from eighth position last year to sixth place this year. Northern Ireland registered the biggest increase in competitiveness, up 4.4 per cent on the previous year, with Yorkshire showing a 4.2 per cent rise. Wales and the North East improved by 3.7 per cent.

Robert Huggins, who compiled the index with the Work Foundation, said: “For as long as most of us can remember, the story of the UK’s economic performance has been a tale of two nations — the go-ahead London and South East region, and the North and West of the country stuck in the doldrums of post-industrial blight. This year’s UK Competitiveness Index represents the first signs that a new chapter is about to be written.” The improvement in competitiveness outside the South East is attributed to regional policy for attracting investment and diversifying local economies.

Brendan Barber, the General Secretary of the TUC, said: “The closing of the gap between the North and the South is good news for the economy and for society. Much of the credit is down to the hard work of the regional development agencies, who have used expert local knowledge to target investment in skills, research and development and new businesses to the areas that need it the most.

“The next step is for the Government to target resources to those industries most likely to be able to compete with the best of the rest of the world. Support for specific sectors, such as high-tech “green” manufacturing, could see the creation of quality jobs allowing the UK to compete in developing global markets.”

The North East also fared well in the Royal Bank of Scotland’s purchasing managers’ index, recording its highest rate of expansion. RBS data for October, published today, indicate that all the exporting regions performed strongly.

Meanwhile, the British Chambers of Commerce (BCC) quarterly economic forecast predicted that UK growth would slow, from 2.6 per cent this year to 2.3 per cent next year. David Kern, the BCC economic adviser, said: “The pace of UK economic growth is set to slow over the next year because disposable incomes are being squeezed, global economic prospects are worsening and UK interest rates are higher and could well increase further.”

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