Business Strategies says growth rates in the north are likely to be just 0.7% below those in the south over the coming months.

Southern regions, below an imaginary line from the Severn to the Wash, are set to grow by an average of 2.1% this year.

Those to north are forecast to grow by 1.4%.

The difference is the narrowest since 1995 and a significant improvement on last year's 2.7% gap which was the widest for more than 10 years.

The divide is expected to narrow even further in 2003, with growth of 2.9% in the north and 3.3% in the south.

Business Strategies said the narrowing was being caused by a slowdown in household spending, which was affecting the south more than the north.