THE Government can boost the UK’s economy the most by investing more in “lagging” regions like the North-East, a respected international economic think tank has found.

A new report from the Organisation for Economic Co-ordination and Development (OECD) reveals how regions that lag behind national growth rates can transform their fortunes.

Following a study of 23 regions around the world including the North-East, researchers found that rather than being a drain on the economy, between 1995 and 2007 so-called lagging regions contributed more than half of the UK’s growth.

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Despite this, the report, Promoting Growth in All Regions, asserts that regions continue to be behind national growth levels and missed opportunities will generate greater costs for society and the national economy.

The study concluded that investing most in current low growth areas could generate the largest return for national economies. This should not be seen a social policy, but could be justified on economic grounds, the report stated.

While infrastructure was important, researchers found that more emphasis should be placed on improving the skills and training of low-skilled workers.

The study has been seized upon by Sedgefield MP Phil Wilson.

He said: “This report highlights the importance of investment in skills and infrastructure, yet what the coalition is doing is the complete opposite of that, by abolishing the regional developments agencies for example.”

The study was also welcomed by Neil Foster, policy and campaigns officer for the Northern TUC.

He said: “This is an important and encouraging report that vindicates all of us in the North-East who believe our best days do not have to be behind us.

“Far from being a drain on the country, regions like ours are making a significant contribution to the national economy, but we can and must do so much more. “ However, he added: “If ministers now follow this pro-growth advice within this they would direct most investment in underdeveloped regions like ours and stop siphoning even more to London and the South-East. “ The Northern TUC said it planned to encourage the economic review led by Lord Adonis for the North Eastern Local Enterprise Partnership to incorporate many of the OECD report’s recommendations.