NEW warnings that the North-South divide is in danger of developing into a chasm prompted new calls for Government action last night.

According to separate studies published last night, the region's town centres are in steep decline and higher numbers of businesses are going bust.

Government ministers will be particularly concerned by the business failure rates, despite the millions pumped into the regional economy.

According to the report authors, business information service Dun & Bradstreet, the figures expose a North-South divide in survival rates for firms.

In London the number of businesses going bust fell by almost 22 per cent. But in the North-East, a 12 per cent increase pushed the figure from 4,848 to 5,422.

The news came as no surprise to Bill Midgley, vice-chairman of the North-East regional assembly and former president of the North-East Chamber of Commerce.

Mr Midgley believes that action must be taken to safeguard the future of businesses in the region.

"One of the main factors is the North-East's greater reliance on manufacturing when compared to other regions, especially the South-East," he said.

"Another reason is the second generation business failures, which have occurred when people use their redundancy money to set up businesses without the necessary capital or knowledge.

"A high proportion of these fail within the first three years."

In the South-East, the business failure rate was 7.7 per cent lower, while ten per cent fewer South-West businesses went under.

Phillip Mellor, senior analyst for D&B, said: "The split between North and South must be a cause for some concern, particularly if the current economic climate begins to slow down this year."

The DTI said the figures reflected the different character and size of individual regions.

In another report published yesterday, Sunderland and Middlesbrough were just two of the places in the region classed as being among the fastest-declining.

The study, carried out by the University College London, Bartlett School of Planning and the University of Southampton, looks at the fortunes of towns and cities in England and Wales during the 20th Century.

A league table, based on factors such as whether a town has a university or college or enjoys direct trains to London, showed areas in the South to be performing better than their northern counterparts.

Towns showing the biggest decline in this category were all in the Midlands or the North, including Middlesbrough.

A similar picture emerged from a second table based on whether a town could boast the presence of certain key chain stores at certain intervals during the 85-year period.

The fastest-declining shopping areas were Hartlepool and South Shields, with nearby places, including Sunderland, Gateshead, Darlington and Middlesbrough, not far behind.

Councillor Ken Walker, leader of Middlesbrough Borough Council, dismissed the survey. He said: "Over the last 12 months, a £28m shopping centre has open-ed, and we would argue that most people regard the town centre in Middlesbrough as being very much on the up.