The post-slowdown generation of English businesses is being founded in affluent, rather than job-hungry, areas, a report has shown.

The rate of start-ups registered in thriving south west cities such as Taunton and Bath was four time that seen in Sunderland last year, a survey by Barclays said.

Start-up hotspots

1: South west London, 65 2: the City, 43 3: north west London, 19 4=: St Albans, Bath, 16 Figures: Start-ups per 1,000 residents

And south west London postcodes attracted new businesses at 10 times the rate of Durham and Liverpool, the report said.

The figures will revive fears of a prosperity gap between the north and south of England.

"The number of new business start-ups followed a clear north-south divide," Thursday's report said.

And the data will fuel debate over the effectiveness of government regeneration policies, and whether development efforts should be aimed at wealthy or down-at-heel areas.

The Royal Institution of Chartered Surveyors last week added its voice to organisations urging a greater focus on thriving regions, calling for an "invest in the best" housing strategy.

'Encouraging signs'

Figures for the first three months of 2002 showed that the number of business start-ups grew for the second successive quarter, raising hopes of economic recovery.

Start-up coldspots

1: Sunderland, 4 2=: Durham, 6 2=: Liverpool, 6 4=: Dartford, Newcastle, Wigan, Romford, Watford, Middlesbrough, Warrington, Wakefield, 7 Figures: Start-ups per 1,000 residents

The total of business closures was, at 99,700, 8% lower than a year ago.

"While there are still more businesses closing than opening, there are encouraging signs of improvement in the marketplace," the report said.

Mike Rogers, small business chief at Barclays, said: "There figures show that financial confidence is returning to entrepreneurs."

He added that Barclays expected the UK economy to grow by "more than 2%" this year.

The Treasury is forecasting growth of 2.5%.