Liverpool concedes defeat to Manchester in battle of the cities

In a move destined to drive their own football supporters into despair, the municipal elders of Liverpool signed off a memorandum yesterday that concedes a long-resisted truth: that their city is in Manchester's shadow.

The concession came in a "joint concordat" between the two cities that commits them once and for all to end an ancient enmity, which is perhaps unique in Britain and most manifest in the tribal hatred when Liverpool Football Club plays Manchester United. The agreement bluntly concluded that Manchester is the "regional capital" and there is "little sense in Liverpool seeking to challenge that reality".

The agreement was significantly signed in Manchester in the presence of John Prescott, the Deputy Prime Minister, and is the product of a 12-month study of the cities' links.

Professor Alan Harding, of Salford University's Centre for Sustainable Urban and Region-al Futures, the report's author, said Manchester's superiority "can be married with Liverpool's unique attributes and distinctive economic strengths".

For the staunch Liverpudlian, advantage has not been surrendered in such a humiliating way since Manchester built its Ship Canal, which bypassed the Mersey's ocean-going trade in the 1890s, though the way United supplanted Liverpool Football Club as the nation's premier force in the early 1990s also took some stomaching.

Liverpool's new breed of enlightened Liberal Democrat leaders and the North West Development Agency (NWDA) have been talking to the Mancunians for several years now. The cities' mutual co-operation was a key part of the development agency's 20-year competitiveness plan two years ago and provides a stark contrast to Yorkshire, where Leeds, the regional capital, and Sheffield are not so close.

On some issues, the cities have remained at loggerheads in recent months: Liverpool's airport pledged "all course of action" to defend its dominance of north-west England's budget airline market, when the Irish operator Ryanair started offering fares of £5 to fly a Manchester-Dublin route and British Airways' budget operator, Go, started examining the establishment of Manchester flights.

But Professor Harding's study – the first to investigate the links between the two cities – defines five areas where a lack of direct competition means co-operation will be to mutual advantage. They include: tourism, marketing, work in cultural industries such as music and computer games software and even sport – Liverpool can cash in on next year's Commonwealth Games in Manchester.

Professor Harding admitted that the politics of such rapprochement were always "difficult" but said the "realism" of Liverpool's council leadership and the strength of the North-west's regional outlook on economic growth were helping.

Liverpool, he said, was finally accepting that Manchester's airport, financial services sector and sports facilities were superior and was no longer trying to match them. "The cities have always been umbilically linked, from the days when Liverpool was the port which delivered goods to the Empire from the manufacturing centre of Manchester," Professor Harding said.

Liverpudlians are assured of one thing: that their city's traditional seaport strengths suggest they should lookto Dublin and Belfast for ways of developing, the report says.