THE North-East is at the bottom of the league table for small business creation, according to new figures.

Statistics released by Chancellor Gordon Brown last night show that 175,455 new businesses started up across the UK last year, equivalent to 37 businesses for every 10,000 adults.

But the North-East rate was just 20 new businesses per 10,000 citizens - less than half the 44 in the South-East.

The figure varies significantly within the region, ranging from 33 new businesses per 10,000 population in Teesdale, to just ten in Wansbeck.

Business leaders in the North-East say more needs to be done to rekindle the region's entrepreneurial spirit to help bridge this North-South divide.

Steve Rankin, North-East regional director of the CBI, said: "These figures reinforce the problem we have that the entrepreneurial spirit in the North-East is not what it used to be.

"That's a legacy of a long period of economic decline in the region and our economic regeneration depends partly on reversing that trend.

"These figures are not encouraging and I think there has to be an overall improvement in economic activity in the region, but I also think there are specific measures which should be taken."

Mr Rankin believes there needs to be a much closer relationship between business and schools.

He said: "There has to be a much greater encouragement to people working in further education to commercialise their ideas to get them into the market place."

A spokesman for One NorthEast, the regional development agency, said: "For a long time the North-East has suffered from poor rates of business start-ups and a lack of confidence.

"But by 2010, our aim is to have a more entrepreneurial North-East to make it a society with a diverse mix of new and developing businesses."

The agency has access to the Regional Venture Capital Fund, a £15m pot to help fledgling businesses to address the funding gap which floors several small and medium sized firms. Grants of between £50,000 and £250,000 are available.

The spokesman added that moves were also advanced for all groups involved in supporting North-East businesses to simplify the help available to them and streamline the system.