The report, Hidden Potential, argues that economic growth in some medium sized cities is being restricted by out of date city centres which should be made more attractive if they are going to attract new businesses.

The report suggests using existing resources such as the Regional Growth Fund [RGF] and Growing Places Fund [GPF] as well as local authority assets and European funding enhanced by additional investment from the private sector.

The report uses Preston as an example with 16% growth in private sector jobs between 1998 and 2008 but a decline of 3% in city centre private sector jobs over the same period. In Sunderland 105 businesses moved to the city in the same period but only three located in the city centre.

Centre for Cities chief executive Alexandra Jones said: "City centres are likely to become ever more important for city growth in the future and as such it is crucial that the UK has a policy to address this issue. Weak city centres are holding back growth in the UK. "An investment fund which uses existing money more effectively as well as drawing in private sector funding to support mid-sized cities to reconfigure their city centres will help them to unlock their potential and support the creation of the jobs the UK needs to grow its economy."