London expected to lag in recovery: North/south divide to continue, says survey

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THE SOUTH-WEST and the East Midlands will experience the strongest regional growth in 1994 while London, the West Midlands and the North are likely to be the last regions to shake off the effects of recession, a survey from Cambridge Econometrics says today.

The findings confirm forecasts by National Westiminster Bank that the traditional north/south divide in the UK is likely to continue narrowing over the medium term.

David Kern, NatWest's chief economist, said: 'The South-east, excluding London, is set for slightly below average growth over the next five years, having grown faster than other regions in the second half of the 1980s.'

He added that Greater London would face particularly acute problems, underperforming the UK total by a wide margin.

The survey of regional economic prospects by Cambridge Econometrics says that Greater London and the eastern half of the Rest of the South-east have continued to lag behind the rest of the country with a smaller fall in unemployment than the national average. But the western half has experienced larger falls in joblessness, as have several counties in the South-west and the West Midlands.

CE predicts growth of 3.5 per cent in the South-west, the strongest region, but only 1.7 per cent in the North, the weakest, where unemployment has fallen very slightly since the recession ended.

It believes that private services will be the main source of new jobs while manufacturing is likely to shed jobs modestly.