Social polarisation, particularly in cities - where white-collar gentrification is being matched by the growth of an unskilled underclass - will produce an atmosphere similar to modern urban America, according to the Henley Centre. 'More than anywhere else, the southern half of the country has become a divided area where winners and losers live side by side,' the report says.
The centre's study identifies what it calls two 'arcs of prosperity' for the 1990s - one based around Cambridge, the other sweeping from the south-west of Birmingham, through Stratford- upon-Avon, into Northamptonshire and Leicestershire. But it also identifies 'massive differences in economic vitality between localities right across the country', caused by unemployment and the collapse in the housing market, and sweeping away the old regional divisions of prosperity.
Growing competitive pressures, many the product of the recent Gatt (General Agreement on Tariffs and Trade) free trade deal, are intensifying the process of localisation. Other factors include the peace dividend, which is threatening defence industries, and differences in local skills and entrepreneurialism.
Cities are playing host to a 'growing band of people who gain no benefit from the regeneration of city centres and whose fortunes are generally declining . . . The coexistence of increasing prosperity and expanding poverty clearly raises important questions about social coherence. This polarisation . . creates the potential for the spread of no-go areas,' it adds.
Stephen Radley, the centre's chief economist and editor of the study, yesterday described such polarisation as a nationwide phenomenon and said there were clear implications for crime and security. 'We may become a bit more like New York,' he added.
The arcs of prosperity identified in the heart of England will benefit from a 'self-sustaining' combination of factors, including a highly-skilled professional workforce, a strong entrepreneurial base and efficient infrastructure links within the UK and Europe. However, even within the heart of England, for example, Northampton will see a growth in affluence but Leicester will suffer because of redundancies in traditional industries such as shoe manufacturing.
In the South-west, Swindon should prosper, thanks to good road access and an established cable network, but other towns will be hit by cutbacks in defence industries or a peripheral location.
Manchester and Cheshire will do well but Liverpool and Merseyside will decline. Parts of London will grow but Kent will fare worse. In Wales, gross domestic product is forecast to grow by 16.6 per cent by 1999, outstripping Greater London.
Henley says the atomisation of Britain's socio-economic map is the result of competition from eastern Europe, the Third World and the single European market, all of which is hitting Britain unevenly. Industry shake-outs - job losses in banking, for instance - and decisions by multinationals about where to set up local branches have had a similar effect.
Places with good prospects will be those which develop their services to business. These include London, Manchester, Birmingham and Leeds. A good communications infrastructure, which includes a cable network, is an ingredient of faster growth.
Local Futures 94; The Henley Centre, 9 Bridewell Place, London EC4V 6AY; pounds 1,950.