Shops are closing on the high street. And the north is hardest hit

The recession officially ended last year but residents of Blackpool might not be convinced as they walk down their high street. The town had the dubious honour of coming top in a study that looked at shop vacancy levels around the country with the statistic that three in 10 of the stores in its town centre lay empty. There is no starker sign of the economic decay caused by recession than boarded-up shops and the recent financial crisis sent a wrecking ball through the high street. The report by the Local Data Company (LDC) calculated that 13% of UK town centre stores were vacant at the end of June, up from 12% in 2009. Those with a sunny disposition can take cheer in the LDC's finding that the rate of shop closures has begun to slow but overall the picture is gloomy, with many more centres getting worse rather than better, coupled with the emergence of a worrying north-south divide. The top 25 worst-hit cities contains just three southern entries: Watford, Bristol and Reading, with the list dominated by cities in the Midlands and the north, with Bradford, Wolverhampton, Manchester and Leeds joining Blackpool in the top 10. Matthew Hopkinson, business development director at the LDC, says the picture is worrying, given the north's reliance on the public sector. "Already there is a clear north-south divide in terms of shop vacancy," he said. "The philosophy underpinning this administration is to shrink the state for good. For some big northern and peripheral centres, this could be the perfect storm." If retail is a window on the wider economy, the outlook is grim. Last week, Terry Duddy, who runs the Argos chain, spoke of a "two-speed" economy with middle-class John Lewis shoppers carrying on regardless while his shoppers from the C2 and D socioeconomic groups had been "hammered by the recession and haven't got out of it". Another piece of research, commissioned by the BBC, looked at the regions most vulnerable to public sector spending cuts. It showed a "clear north-south divide" with Middlesbrough, Mansfield and Stoke-on-Trent judged to be the most exposed. By comparison, Elmbridge in Surrey, with its grand properties and easy access to London, St Albans in Hertfordshire and Waverley in Surrey were best placed to ride them out. The official retail sales figures for August showed a conservative increase in demand as worried consumers sat on their hands. With VAT set to rise from 17.5% to 20% in January, retailers are worried: shops are expensive to run at the best of times as the internet nibbles away at the edges of the sector. The harsh reality is that many of these empty shops will stay that way.