The economic divide between the south of England and the Midlands and north appears to be gradually closing as a report signalled once struggling cities were the most improved places to live and work in the UK.

An analysis by accountant PwC and thinktank Demos ranks Birmingham as the most rapidly-improving city in the country, and places Leeds, Newcastle, Derby and Liverpool among the top ten places on the up.

While Birmingham still ranked 32nd overall in the annual study, the report noted how the “second city” improved its index score on a year ago – as did other Midlands and northern cities that have struggled to cope as their traditional industries have declined.

The report found an improvement in jobs, income and skills among a series of much-improved measures.

The 2017 Good Growth for Cities index gauged 42 UK cities on the basis of transport, work-life balance, inequality and health, as well as income levels.

Years of regional devolution have now started to bear fruit, the report suggested, even before Birmingham and many other so-called ‘city-regions’ have been given directly-elected mayors, taking power away from Westminster.

A major justification for building the high-speed HS2 rail line has been to boost the economies of Birmingham and other cities and towns north of London. 

However, Oxford and Reading remain well ahead according to the index, and cities in the north east – notably Sunderland, Middlesbrough and Stockton – remain at the bottom of the list. 

Birmingham’s unemployment rate fell to 7.4% last year from 11.4% in 2013, and it has been buoyed by the regeneration of New Street station and the new Grand Central shopping centre among a string of investments.

The study did point to housing becoming less affordable, fewer people owning their own property, commuter times increasing and minor declines in both the health and work-life balance indicators across the 42 cities.

John Hawksworth, chief economist at PwC, said: “The UK has been a great job-creating machine in recent years and this has driven improvement in our good growth index this year across all major UK cities.”