Leading article: Two nations once more

The North-South divide has faded from the public imagination recently. The renaissance of cities such as Manchester and Newcastle has been so striking that many have forgotten how derelict they looked in the 1980s, after the Thatcher government's abrupt withdrawal of state aid for traditional industries created mass unemployment.

Those who remember those divisive times would not wish them back, which is why it is worrying that the old divide may be reasserting itself. Figures produced by the Centre for Economic and Business Research predict that unemployment will rise beyond 10 per cent in the North, the West Midlands and Wales over the next five years, while London and the South-east's share of total business activity will jump to 20 per cent, up from 16 per cent in the mid-1990s.

Ten per cent is not high by the standards of some EU partners, admittedly. What is disturbing is the trend and a fear that the figures could be optimistic. We still don't know where George Osborne's spending cuts will fall. All will be revealed when the Chancellor releases the spending review in October. But we know the reductions will be deep and significant. While no one disputes the need to lower the deficit, sharp falls in public spending, delivered across the board, will hit regions like the North hardest. This is because the proportion of the population there working in the public sector is far higher than in the South.

Political self-interest as well as the national interest should compel the Chancellor and Prime Minister David Cameron to think carefully. The Tories were almost wiped out in the North in the 1980s as a result of the Thatcher government's apparent indifference to the impact that its policies were having. Mr Cameron will not wish to see the Tories' modest recovery in the North annihilated for the same reason. He must also be well aware of the strain it would place on his Liberal Democrat Coalition partners if regions like the North were to suffer unduly as a result of cuts.

He and the Chancellor should think of ways to calibrate the imposition of spending cuts, taking into account their overall effect on regions. Cuts in the number of civil servants should be less severe in those regions where unemployment is highest. Some might call such measures unfair, privileging certain categories of people on the basis of where they live. The alternative could be a return to the blighted urban landscapes of the 1980s. The choice should be clear.

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