Gordon Brown has leant his support to the campaign to establish a regional assembly in North East England.

The chancellor, who joined deputy prime minister John Prescott in a visit to Newcastle on Tuesday, said the move would be "good for the people and the businesses in the North East".

Seeking to place devolution in a broader economic context, Brown said dealing with the consequences of globalisation required local solutions.

He said a "new generation of regional economic policy measures" aimed to support local enterprise, innovation and skills.

"The fact is that the whole of the UK suffers, and balanced economic growth becomes impossible, if we have unemployment, emigration and the under-utilisation of potential and resources in the some areas and yet congestion, overcrowding and inflationary pressures in others," he added.

But Brown insisted that "there is nothing inevitable about regional inequalities".

"The North-South divide is not and should never be treated as a permanent feature of the British economy," he insisted.

Powers

Devolving more powers to the English regions would allow the government to deliver on its third term aim of "breaking down the barriers to enterprise", said the chancellor.

"An elected assembly will be able to capture the regional energy and pride and make it work harder for the people of the North.

"And I believe an elected regional assembly would make a huge difference

"The elected assembly would allow the North East to set its own priorities, and to work with central government and its regional neighbours to deliver more jobs, more growth and a better quality of life."

He added: "It's not just about strengthening democracy and gaining a political voice.

"As I have explained it's also about jobs, growth and prosperity.

"It's about enabling the North to catch up with the South and lead Britain.

"And it's about raising quality of life and increasing opportunity."

Brown added that November's referendum would be "a big test for all of us".

"This is a great opportunity for the North East to gain a powerful voice which will be good for jobs, good for business and a boost for the North East economy," he said.

"That's why I urge everyone in the North East to use their referendum vote to say 'yes'."

The chancellor also paid glowing tribute to Prescott's work in pushing forward the devolution agenda, saying he "deserves our personal gratitude".