London's split with North '˜to widen by £50bn'

An economic divide between the region and the capital will widen by £50bn over the next decade, the joint UK Powerhouse report by law firm Irwin Mitchell and the Centre for Economic and Business Research (Cebr) warns.

And the prediction comes as oil and gas engineering firm OneSubsea considers ceasing manufacturing at its operation in Leeds next year, with the loss of up to 600 jobs.

In the report released yesterday, the law firm and Cebr forecast the £49.9bn gap despite the region’s largest cities experiencing significant growth in output during the second quarter of 2016.

The report claims that by 2026, London’s economy will expand by 16.3 per cent and that southern communities such as Milton Keynes and Cambridge will grow by 22 per cent.

But Leeds, Sheffield, Hull and Bradford will experience growth by the end of the next decade of 13.1 per cent, 11.6 per cent, 11.1 per cent, 10.3 per cent respectively, it says.

Mike Cartwright, the policy and representation executive at the West and North Yorkshire Chamber of Commerce, said: “If the prediction is correct, this would be very damaging to the Government’s commitment to empowering Yorkshire and the rest of the North through the Powerhouse concept.”

Managing economist at Cebr Nina Skero said that one reason why the South could outpace the North in its growth rate is because a lot of 33 to 40-year-olds are moving to London for its wealth of IT and finance jobs. “That skills drain makes it all the more difficult for different parts of the country to catch up,” she said.

She added that the region has had a dependency on the public sector for jobs – which there has been on going efforts to cut over the last five years.

Leeds City Council warned in July that between 1,000 and 2,000 of its jobs are at risk up until 2020. But Leeds City Council’s leader Judith Blake said: “We work hard with both private and public sectors, along with Government, to maximise our infrastructure, investment and jobs opportunities.

“This approach has paid off as we’ve seen big growth in our digital industries in the past couple of years and our financial sector continues to go from strength to strength.”

Prime Minister Theresa May said in her speech at the Conservative Party conference yesterday that thanks to the Northern Powerhouse, foreign direct investment in the North has increased at double the rate of the rest of the country over the past year.

A Treasury spokesman said the Government is “determined to rebalance the economy”.

He added: “But we are clear the job is not finished and there will be no let-up in our commitment as we push on with our plans to build an economy that works for everyone.”

The UK Powerhouse report provides an estimate of Gross Value Added and job creation within 38 of the UK’s largest cities.