Brexit “chaos” is holding the north of England back from realising its full potential, a think-tank has said.

Plans to create a Northern Powerhouse, announced by ex-Chancellor George Osborne in 2014, have been “deprioritised” by the government, the Institute of Public Policy Research North said in a report.

The plan was for the the region to become “a collection of northern cities sufficiently close to each other that combined they can take on the world”, Osborne declared at the time, but it has “defied any clear definition”, the report said.

In order for the plan to take effect, it needs to be overseen by leaders in the North rather than in Whitehall, the body wrote in the State of the North 2018 report.

“The Government is so consumed by Westminster’s Brexit chaos that it has deprioritised the Northern Powerhouse agenda at the very time it is needed most. This cannot continue,” wrote author Luke Raikes.

“All our regional economies face severe challenges – including London’s. Brexit threatens to make this much worse and the Northern powerhouse agenda is the best chance we have of fixing this national economic crisis. In the national interest, the North needs to thrive.”

Raikes added that the “next phase of the Northern Powerhouse must be of the North, by the North, for the North.”

The initiative would have to be felt across the region, as opposed to creating a “London-style megaregion” around hubs like Manchester.

The report lists five priorities, including calling for wider investment in things such as skills and social infrastructure, not just in transport, and delivering economic justice in the region which has seen productivity 12.6% lower than the national average.

Dan Jarvis MP, chair of the Sheffield City region, said: “As leaders in the North, we know that by working together we can be more than the sum of our parts,

Power and resources must be developed to the right level, in order to enable those who know their regions best to invest money where it is most needed and drive prosperity for all.”

The government appointed a minister for the Northern powerhouse in 2015 and announced a Northern Powerhouse body in July this year.