THE economic revival of the North-East is being threatened by fiscal policies which favour the “dysfunctional”

City of London, said a group of leading academics.

Their report calls for radical economic strategies that would allow the UK’s regions to raise their own taxes and develop initiatives to create private sector jobs.

The document, City State against national settlement: UK economic policy and politics after the financial crisis, likens the City of London to a finance-dominated city state that, despite causing the financial crisis, had been protected by successive governments.

Professor Karel Williams, from the Centre for Research on Socio-Cultural Change at the University of Manchester, is one of the report’s six authors.

He said the economic crisis had prompted the coalition Government to cut benefits and reduce the public sector, which under prime ministers Margaret Thatcher and Tony Blair had been the life support mechanisms for regions like the North- East.

“These were the two props of regions like the North-East and everybody knows it,” he said.

“The coalition Government’s fiscal policies threaten to wreck the regions.”

The report argues that the credible response is for radical, new economic policies, which could be launched through local and regional initiatives.

Prof Williams said: “People need to start thinking regionally in England, as the Scots are thinking regionally.

“You shouldn’t rely on the national government to sort things out because the national government is not working nationally, it is working on behalf of the city state.”

He added: “Cameron, Clegg, Osborne – they’re from the metropolitan elite – what do they know about Midddlesbrough?

“Their idea is that we need welfare reforms – we need some jobs.”

The report publishes figures showing that while job losses were reported in every other region between 2007 and last year – including 6.1 per cent cuts in the North-East – employment figures increased by 0.7 per cent in London.

However, while past generations in need of work could move to find jobs, the majority of new positions created in London were low-paid and had gone to people born outside of the UK, the report found.

Only a “couple of football stadiums full” of those working in finance had benefited from London’s success, said Prof Williams.