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Widening gap highlighted

Monday 7 January 2013 6:00

New research has highlighted the widening North/South gap caused by discrepancies between regional welfare bills.

A report by consultancy Oxford Economics claims that the South East will contribute more than a third of the nation’s entire tax income this year and is likely to be the only region making a positive contribution to the exchequer.

The reliance on the capital and surrounding area is likely to grow in coming years as most other regions fall increasingly into deficit.

The report, cited in The Times, warns that higher welfare bills are to blame for the deficit faced elsewhere in the UK, with state hand-outs accounting for 29% of the North East economy.

Helen McDermott, senior economist, was reported as saying: “On our estimates, most UK regions were in deficit even during the peak years of growth in the early half of the last decade.”

In total, the south-east is expected to be in surplus to the tune of £50bn while the rest of Britain is in deficit by £40bn.