The plight of the tens of thousands in Yorkshire and Humberside whose communities have been devastated by flooding has again turned national attention to the issues of Britain’s North-South divide.

Anger and resentment in the afflicted areas over London’s response to the torrents laying waste to large tracts of the North highlight once more how economic tides seem to have run inexorably in favour of the South.

That an economic gulf cleaves Britain in two, and that it threatens to yawn ever wider in coming years, is all too clear. The scale of the regional disparities that define this abyss are mapped out in stark terms in a recent report by the Organisation for Economic Cooperation and Development.

The OECD’s analysis, which crunches data from its member states across the developed world, shows that for all Britain’s economic success in the past decade, large parts of the country have failed to share in its rising prosperity.

Britain emerges as having a much wider range of recent economic performance between regions than almost all its main competitors, while the divergence in regional living standards is wider than in any OECD member bar Turkey.

Between 1998 and 2003, economic growth around the UK spanned a huge range, between minus 1.2 per cent and 9.6 per cent , widening the gap between the country’s poorest and most prosperous areas. Gauged by GDP per head, the nation’s richest area, the western part of inner London, was five times better off than the national average. Yet, at the same time, GDP per head in the poorest area, Anglesey, was barely more than half the national average.

It is true, as Tony Blair was once at pains to insist, that such vast economic gaps between regions also mask great disparities within them. London as a whole may be hugely wealthy, but is itself blighted by pockets of intense poverty, deprivation and crime. Yet this patchwork quilt of variation within regions is dwarfed by a systemic divergence of fortunes between the big regional blocs of North and South. And if Britain is already bottom heavy, it seems set to become steadily more so.

Last month, Experian, the consultancy, concluded that the UK economy was likely to become more divided than ever as “only a handful of cities outside the South East deliver robust economic growth”. Its report pointed to booming London GDP growth of about 3.8 per cent last year, far above the UK average of 2.7 per cent, and almost twice the 2 per cent pace outside the South East.

Its conclusions chimed with an analysis last year, looking forward to 2030, by Ove Arup and Oxford Economic Forecasting (OEF). It found the magnetic effect of London’s economic dynamism as a burgeoning “mega-city”, sucking in people and wealth, meant that any reversal of the fundamental trends behind the North-South divide over the next quarter-century was extremely unlikely.

Population and employment trends are crucial. London accounts for almost two thirds of the natural increase in England’s population. It absorbs 60 per cent of foreign migrants. And its thriving jobs market, boosted by the explosive growth of the City, increasingly lures the young and educated from the regions.

As the Ove Arup study noted, from 1971 to 2004, the North of England created a meagre net total of just 10,100 jobs. In the South, the figure was 2.73 million. Little wonder that the young are beating a path to the capital. The result is that London and the South East are locked into a virtuous cycle while the North is trapped in a vicious one: a steady exodus of the young and well qualified draining the lifeblood from its economies.

Yet these trends create problems for London, too, straining creaking infrastructure and undermining quality of life.

In much of the first half of this decade, the Government managed to evade these issues for two reasons. First, a bear market in shares checked London’s advance. Secondly, Gordon Brown’s state spending spree on the public services boosted both growth and employment across the North. Now, however, with public finances overstretched, and Mr Brown’s largesse over, the North-South divide seems set to reassert itself as a key political question.

There are no panaceas. The new Prime Minister’s previous spending blitz may temporarily have camouflaged the problems, but it has, fundamentally, added to them. Swaths of the North have been left dependent on taxpayer subsidy, with such large state sectors that private enterprise has been stifled. This has left some regions looking like the Potemkin villages of 18th century Russia. Public spending in England’s North East accounts for 65 per cent of the economy; in Northern Ireland, the startling figure is 76 per cent.

Just as this excessive reliance on the State tends to crowd out private business activity, so, too, the seemingly commonsense policy of shifting government agencies and jobs from a crowded South East to a struggling North is probably dangerously counterproductive.

A study by Klaus Desmet, a Spanish academic, highlights the abject failure of such strategies in southern Italy and eastern Germany. Transfers of government jobs to these regions led to wages there being driven upwards, so that they tended to rise faster than (already weak) productivity growth. The bottom line is that regional competitiveness ended up further undermined, and the attractiveness of these areas to foreign and domestic businesses was undercut. As Dr Desmet noted, Italy’s Mezzogiorno was enjoying a period of rapid economic catchup with the rest of the country in the 1960s, until the advent of large-scale government intervention the following decade brought this to a halt. Since then, it has gone backwards.

Government action can play a role in trying to narrow Britain’s own national rift. But it is hard not to conclude that it should largely be limited to perhaps three things. First, measures that boost skills and education and so enhance regional productivity and competitiveness. Secondly, investments in infrastructure, and especially in transport, that can help to link up regional economies so that they can achieve the critical mass they need to thrive. And thirdly, the time may have arrived when ministers must also seriously contemplate significant corporate tax incentives to draw economic activity away from England’s overheated and overcrowded South East.

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