Rise in the price of energy widens North-South divide

The gap in economic growth between the North and South has opened up to its widest level in three years, according to a report published today.

The gap in economic growth between the North and South has opened up to its widest level in three years, according to a report published today.

The slowdown in growth in the US and China and the surge in oil prices have hit manufacturing in the North of England more than the services-based South, it said.

A regional index of business activity showed that the difference between rates of growth in the South-east, the fastest-growing region, and the West Midlands, the laggard, had hit its highest level since 2001.

The latest survey, produced by NTC Research for the Royal Bank of Scotland, contrasted markedly with the start of the year, when regional growth rates were broadly similar.

Activity has expanded in the South-east and fallen only marginally in the South-west since January, but has slumped in the West Midlands, North-west and Yorkshire.

The West Midlands has tumbled from 5th to 12th best-performing region since January, while the North-west has fallen from 3rd to 8th.

Jeremy Peat, at RBS, said: "It is disconcerting to see a widening differential in regional economic performance."

He said there was also a divide in terms of employment, with redundancies in the West Midlands but a hiring spree in London and the South-east.

Mr Peat said the downturn was related to the recent "soft patch" in the US, in turn associated with the higher price of oil and uncertainties in the run-up to the presidential election.