Outlook gloomy for North East

The North East ranks second to last in UK prosperity stakes

Despite Prime Minister Tony Blair's denial of a north-south divide, many people living in the UK's poorer regions tell a very different story. The BBC's North East industrial correspondent Ian Reeve reports.

The findings of the Oxford Economic Forecasting (OEF) unit will be read with particular interest in the North East.

Many people who live here have long felt they lose out in numerous ways to people in the South.

But it took an apparent admission 18 months ago by the Governor of the Bank of England Eddie George that unemployment in the North was a price worth paying to damp down inflationary pressures in the South to really ignite the North-South divide debate.

Eddie George: Reignited the North-South debate

Mr George's unfortunate phrasing led to impassioned calls to BBC local radio stations, regional newspapers campaigned for his dismissal and suddenly the apparent inequities of the North-South divide became a big talking point.

That the divide exists at all is down to the North East's dependence on manufacturing, hit most recently by the strength of the pound. And when North East manufacturing loses its competitive edge the result is the loss of 4,000 jobs - as we've seen over theplast year.

And the divide is apparent in other ways. Last week's set of unemployment figures showed more than a 100,000 people out of work in the North East, a rise of 1,000 on the month before. Nearly 9% of the workforce here doesn't have a job.

In the South they have pockets of poverty. In the North we have pockets of affluence

Northern businessman

But nationally the jobless total fell, leaving the North East with unemployment three and a half per cent above the country's average. Proof, many would say in this region, that there is a palpably widening North-South divide.

And if the argument of the existence of a divide needed bolstering, the region's record of poor health and low education standards could also be pointed to.

Pockets of prosperity

And yet there is some merit in the arguments of those who claim the North-South divide is much more complex than that. They point out that some towns in North Yorkshire have only less than 2% of the workforce without a job.

But in parts of London such as Haringey, Lewisham and Newham the jobless rate percentage is counted in double figures.

And there's plenty of anecdotal evidence as well. In Middlesbrough - a town hit by the demise of the steel and chemical industries - it's possible to pay London prices in the exclusive Purple Onion restaurant.

Other diners could be Premier League footballers or a handful of chief executives from the region's 30 stock market-listed companies.

All are happy to pay the prices demanded, before driving the two miles home to their £400,000 houses on the exclusive Wynyard estate.

How to explain such wealth in an area that complains long and hard about a North/South divide? According to one Northern businessman: "In the South they have pockets of poverty. In the North we have pockets of affluence."