YORK'S economy is one of the best performing in the country, according to a report by a national think tank.

The Centre For Cities says York is among the top performers for employment, population increase and earnings growth, and has one of the smallest rich-poor gaps of any major city.

Bill McCarthy, chief executive of City of York Council, said today: "This report shows that the city of York is in good shape compared to other cities in the UK in terms of employment growth and income. We remain committed through the priorities set within the council's strategy for 2007-2011 to increase prosperity of the city's residents whilst retaining a focus on minimising income differentials within the city."

The report, Cities Outlook 2008, analysed the recent economic performance of UK cities.

It found York had the seventh-highest employment rate, with 78.9 per cent of working-age adults in employment. The remaining 21.1 per cent includes not only the unemployed, but people who are willingly not in work, such as students and people who have taken early retirement.

York was also rated highly for earnings growth, coming second in the UK. The average weekly wage in York in 2006 was £534.90 - up 24 per cent in four years. Only Liverpool had seen a faster wages growth. Overall, York's average wage is the ninth highest in the country. The report also placed York in the top 25 cities in the country for employment growth, and labelled it "low" for deprivation. York was also listed as one of the ten best cities in the UK for having the smallest disparity between those on the highest and lowest incomes, and it had the fourth lowest number of residents claiming benefits - nine per cent.

Council leader Steve Galloway said: "I am delighted that this independent report confirms not only the continuing prosperity of the city, but also that the gap between rich and poor is less than in other cities.

York continues to be one of the best cities in Europe in which to live."

Labour leader David Scott welcomed the positive findings in the report, but said: "Despite this, York faces many challenges. It still has areas of acute deprivation, where residents still live below the poverty line. The city has lost well-paid manufacturing jobs and replaced them with jobs paid at the minimum wage. It runs the risk of creating a two-tier economy where those on low wages cannot access training and cannot therefore escape into better paid jobs."

He said the rising population was putting a strain on the housing market, leading to house prices rocketing beyond many first-time buyers' reach.