Birmingham should share #3.5 billion of European Structural Funding alongside Manchester, Newcastle, Glasgow, and Leeds, according to a new report published today.

The study, by the Centre for Cities at the Institute for Public Policy Research, argues these cities should take the lion's share of Britain's diminished EU pot because they have greater potential. Recent European enlargement means that the money the UK gets from the EU for regional development will decrease from #11.5 billion in 2000-2006 to #6.5 billion from 2007-2013.

The EU has already set aside #3 billion for South Yorkshire, Merseyside, Cornwall and the Isles of Scilly, west Wales and the Valleys, and Scotland's Highlands and Islands.

The Centre for Cities report says that the remaining #3.5 billion should be targeted on a small number of city-regions - areas with strong growth potential like Birmingham - over the next seven years.

It argues that this would be the most effective way to use EU funds to help tackle regional disparities, create jobs and promote economic growth.

Over the last 20 years structural funds have financed major regeneration projects and critical urban transport projects in all UK nations and regions including the International Convention Centre in Birmingham.

Dermot Finch, Centre for Cities director, said: "Our share of European Structural Funds is about to fall by more than 40 per cent.

"We will need to do more with less. We should spend this last slice of EU money on high potential areas outside the South East.

"Concentrating EU funds in big cities, such as Birmingham, will help to drive economic growth not just in those cities but across those regions."

The Government is currently consulting on how to spend the money over the next seven years.