THE work foundation has put a lot of effort into studying what can be done about the north-south divide and rebalancing the UK economy.

Neil Lee, senior economist at Work Foundation, said: “Its more complicated than is often made out. Places like Chester do well compared to parts of the south like Hastings.”

Nor is it just a question of refining geographical terms. It is also wrong to focus too much on manufacturing.

Mr Lee said: “There’s been a lot of hope put on replacing the City with a manufacturing led recovery, but that’s a bit romantic. The latest German economic figures suggest we shouldn’t be too rosy in our outlook for manufacturing.”

While Germany has many high-tech manufacturers, such as BMW, it also has a big reliance on the Mittelstadt, smaller family-run firms that are more vulnerable to difficult conditions. Its not necessarily a great model to follow.

Mr Lee points out that the UK has strengths in more than two sectors. As well as financial services and manufacturing, the country is also strong in the creative industries such as advertising and software design. Britain’s universities, including Liverpool, are good at attracting overseas students, thereby helping the balance of trade.

Mr Lee said: “We need to be a bit cautious about the idea that the government can rebalance the economy to manufacturing and whether that is really a good thing.

“There isn’t the money to make the rebalancing happen. The government is cutting, and there is less money going into economic development.

“The most important factor is the skills of the workforce. That starts with education and we need to retain graduates.”

One prospective source of growth is the “manu-servicing” model. Manu-servicing firms make something, but they will make most of their money from servicing the product over its lifetime. An example is Rolls Royce aero-engines. Mr Lee added: “They tend to be more successful than companies that just make stuff.”