London Briefing:  One or two of us were very nearly astonished the other day when Tony Blair appeared to give a straightforward "don't know" answer to a not terribly difficult question.

First impressions can be deceiving of course, and it quickly became clear that the Prime Minister did not mean to be so direct.

David Frost, the veteran TV presenter, had asked Blair what he thought about the increasing dependency of various regions of the UK on government spending. Frost had dug up a report which claimed to show that the average person living in Wales, Northern Ireland, bits of the north east of England and much of Scotland were as dependent on the state as was the average citizen of the old Soviet Union.

Two things do stand out from the statistics. First, government expenditure as a proportion of GDP in these regions of the UK is worryingly high. A second, obviously related, point is that more people than ever in those same regions are directly employed by the state.

This is disturbing from a number of angles. In general terms, there is the high Tory argument about the natural size of government: once public expenditure passes a tipping point, private enterprise is stifled and the natural rate of economic growth begins to fall. A more specific argument relates to taxation: if Londoners knew just how much they were subsidising the regions there would be an outcry.

The interesting questions that arise from all of this are, first, why is it happening and, second, what, if anything, can be done about it. There is, of course, an ideological debate about whether or not we should worry about these trends. On one level, people in the south east of England might be happy to subsidise the regions if the only alternative is yet more inward migration into an already overcrowded corner of the country.

A more preferable outcome would be economically dynamic regions growing less, rather than more, dependent on government handouts.

At the very least, if growing dependence is a trend then it must have a limit beyond which the southern English taxpayer will not be pushed. Better to do something about the problem rather than find out where that limit is.

Blair's answer to Frost's questions went as follows: "I don't know what to make of those statistics". At first blush it does look as if the Prime Minister has finally owned up to economic illiteracy.

A bit late we might think, and a very odd time to have an attack of self deprecating honesty, but credit where credit is due. The guy is finally coming clean.

All too good to be true, of course. What Blair went on to say, essentially, was that if the overall economy is growing strongly, why should we worry about peculiar statistics about different bits of the country? What's a few dodgy statistics amongst friends when we all know how well the economy has been doing. After all, Gordon Brown keeps telling us that things have not been as good since 1700.

Frost let us all down by letting Blair get away with this. He could have used another clichéd statistical point to chide Blair: a statistician would say that a man with his feet in an oven and his head in a fridge is, on average, comfortable.

The UK economy may look OK in the round but London and its environs are bursting at the seams, and paying all the taxes, while much of the rest of the country relies on Blair for its living. More fundamentally, Blair should have been challenged on his implicit acceptance of the current situation: even if he thinks these regional disparities are OK, how sustainable are they? How much further can the gap be allowed to grow before his averagely OK economy begins to suffer?

My own guess is that these regional issues are part of a bigger picture: the huge structural economic gains of the 1980s and early 1990s laid the seeds for the success of the last eight years. But the policies of the last eight years have squandered many of those gains.

It is tempting to argue that the election could not be better timed for Blair.

The economy is set to deteriorate from here. All the cheerleading by Brown about the most stable and successful economy in Europe will come to be seen as hubris. One very smart hedge fund manager said to me the other day that he is laying bets that the UK economy will be growing more slowly than Germany by the end of the year.

Chris Johns is an investment strategist with Collins Stewart. All opinions are personal.