Reports confirm north-south divide grows even wider

The north-south divide, bugbear of the British business cycle, has reopened, according to two new reports. House prices in Greater London have risen two times faster than the national average, according to the latest regional breakdown from Halifax. In the third quarter of this year they rose by 1.8 per cent in the capital compared to a national average increase of 0.9 per cent and a decline of 0.7 per cent in Northern Ireland.

House price booms normally ripple out slowly from London through the South-east and on to the rest of the country and in July Halifax reported that this pattern had begun to emerge.

However, in its commentary yesterday, it said: "The latest figures show little evidence that the so-called `ripple effect' is gaining momentum."

As a result the gap between northern and southern prices gapes wide. The average semi in a pleasant London suburb such as Ealing costs pounds 186,250, according to Halifax's figures, while a similar property in Harrogate would cost only pounds 70,450. The national average price of a semi is pounds 65,898.

A separate report yesterday focused on the uneven regional spread of the economic recovery. Business Strategies Ltd (BSL) said the combination of booming consumer spending with limping growth in manufacturing meant that "the old north-south divide is opening up again".

Neil Blake, a director of the consultancy, said London, the South-east and the South-west, along with parts of the east Midlands, were prospering because of their greater exposure to consumer spending and private sector service businesses.

The report predicts private services will grow by 6.4 per cent this year, compared to a meagre 1.7 per cent expansion in manufacturing.

BSL is predicting the boom will be shortlived, with growth slowing to 2 per cent next year from a likely 3.4 per cent this year. However, the report puts average economic growth at 2.7 per cent between 1993 and 2000, compared with 2.2 per cent between 1982 and 1993.-