UK wealth divide 'set to shrink'

Growing property prices, increased wages and entrepreneurship mean that other regions are narrowing the gap, research by for SG Hambros implies.

The North West of England will be among the key areas seeing more wealth, the report predicts.

It adds that the East Midlands will have the fastest growth in new firms.

Meanwhile house prices will rise fastest in the North East of England.

Lower costs

While London and the South East will still be the wealthiest part of the UK, growth elsewhere reflects a "changing pattern" of enterprise, the survey said.

"Rising costs have led to a number of firms establishing their bases away from the capital," Phil McIlwraith, deputy managing director of SG Hambros, said.

Such firms will "be able to take greater advantage of the lower operational costs, better quality of life and improved transport links that living and running a business outside London affords them", he added.

The report underlines the importance of Birmingham as home to the largest concentration of firms outside London.

And it describes Leeds as "the financial backbone of Yorkshire".

The increase in wealth outside the South East is "good news for homeowners in the North East of England", said the report - though prospects in Northern Ireland and Wales "looked bleak".

The North East has the lowest house prices in the UK, but it could become a "property hotspot" as house prices are expected to rise at a faster pace than the national average, the report, compiled by Datamonitor, said.

The findings comes soon after a PricewaterhouseCoopers (PwC) survey forecast that London would overtake Paris and Chicago as the fourth largest economy among world cities by 2020.

While Tokyo, New York and Los Angeles will rank ahead of London by 2020, the capital's growth rate of 3% was expected to outstrip that of its rivals, PwC said.

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