The South East is set to spearhead the UK's economic growth over the next ten years, long-range forecasts predict.

Figures from the economic analysts Business Strategies show that growth in the region will average 3.3 per cent a year.

All this will help the UK achieve a growth rate averaging 2.7 per cent a year over the next ten years, without a return to the "stop-go" policies of the past, Business Strategies say.

The UK forecast is down on the average of three per cent achieved between 1993 and 1999. But it is still better than anything else achieved over any five-year period in the preceding 30 years.

It compares favourably with the 2.5 per cent average, which the Treasury and the Bank of England are assuming.

Banking and finance is one of the few sectors where the pace of growth is expected to quicken. BS analysts predict growth in financial services will be the fastest in decades, in part under pinned by an insurance revival.

The big positive impact on growth is expected to come from improved productivity. This will be partly related to the uptake of new technology.

Strong growth is expected in industries like communications, business services and electrical engineering, which have seen rapid expansion over the last ten years, but growth will be slightly less frenetic.

The latest waves of internet technology will restrict growth in paper, printing and publishing.

Business Strategies managing economist Richard Tyldsley said: "The South East's growth will he helped by its highly-qualified workforce, and a good range of rapidly growing industries. London's rapidly-growing labour supply, partly resulting front international migration, will help expansion of the capital's output.

"Overall, the UK economy seems set to continue its remarkably benign phase of development. The impact of e-business on costs, heightened competition in commodity markets, enhanced labour market efficiency and the establishment of the MPC should ensure growth is possible without a return to 'stop-go' policies."

On a more sour note, the report predicts the North-South divide is likely to widen further.