Roll the clock back a year and Britain was in the middle of the EU referendum battle. The remain side was warning about the economic consequences of Brexit; the leave side was extolling the benefits of taking back control. Leave won decisively but narrowly enough to give the remainers hope that the public would rethink its decision.

The general election campaign has exposed that hope as a fantasy. Brexit is accepted as a political given by both the Conservatives and Labour. The Liberal Democrats have struggled despite promising to hold a second referendum. Britain will indeed “take back control” in early 2019. And then what?

Much of the focus since the referendum has been on what sort of trade arrangements a Brexit Britain will have. The real focus should be on sorting out the long-term weaknesses of the economy. Countries with successful economies find markets for their exports no matter whether they are part of a single market or customs union.

The real challenge is different. Britain, in the aggregate at least, cannot produce the wealth it is going to need to meet the challenges of an ageing population. This would be the case in or out of the EU. Leaving simply means that the challenge cannot be ducked as it has been in the past. The Institute for Fiscal Studies has highlighted the extent of the demographic pressures and what they mean for the public finances. Over the next five years, the population of the UK is expected to rise by 3%, but there will be a 9% increase in the number of people over 65 and a 15% increase in those over 85.

More old people means higher pension costs despite the increase in the official retirement age and higher health costs, because the average 90-year-old costs eight times as much to treat each year as the average 30-year-old. The share of national income accounted for by pensions has just about doubled since the second world war to 12% of GDP, and is expected to increase by a further seven percentage points over the next half a century. In the post-1945 period, the rise in pension and health spending was matched by a decline in outlays on defence and debt interest.

Today, there is no low hanging fruit to be picked, leaving the IFS to conclude that the choice is between increasing the size of the state, reducing spending on pensions and health, or cutting back elsewhere. The slower the economy grows the tougher these choices become.

Getting the big picture right is part of the story, and the mix of ultra-low interest rates and austerity used since 2010 has not worked.

But to a large extent, raising Britain’s game is a local rather than a national issue. Research by the Centre for Cities thinktank shows that productivity in the greater south-east (which includes London) is higher than it is Germany. The problem is that it takes a worker in the north and the Midlands five days to produce what a worker in the greater south-east can produce in three-and-a-half days.

The disparity is particularly marked in urban areas. Cities in the greater south-east are 50% more productive than those in the north. Were the gap to be closed, the north’s economy would be £154bn bigger. That’s the equivalent of adding three more cities the size of Manchester to the northern economy, and potentially a lot of extra resources available for health and pensions.

This is a long-standing problem. Work by Steve Fothergill and Christina Beatty at Sheffield Hallam University has shown how the UK’s old manufacturing heartlands have never really recovered from the deindustrialisation of the 1980s and, to make matters worse, have been at the sharp end of the welfare cuts introduced since 2010.

The unemployment rate has come down but the jobs that have been created have tended to be in low-wage sectors such as distribution and call centres. Unsurprisingly, there has been an exodus of the young and talented to the more prosperous parts of the country. Those left behind voted in their droves for Brexit because they felt, rightly, that the economy was not working for them.

Peter Kenway of the New Policy Institute observes that Britain’s industrial strategy for the past three decades has been membership of the EU, which has ensured access both to the single market and to labour, which has flowed to the parts of the country that have needed it. This has resulted in faster growth and stronger support for remain in the greater south-east but has brought its own regional problem: a housing shortage.

The Brexit-voting parts of the country, by contrast, have not reaped the same benefits. Indeed, they have probably suffered as a result of the concentration of growth in London and the south-east. Why? Because the flow of global capital into the City has pushed up the value of the pound, making life harder for exporters in regions that still rely heavily on manufacturing. Because London’s success has meant it has had first claim on money for infrastructure. And because the brain drain has left cities in the north such as Liverpool and Stoke with large numbers of poorly skilled adults trying to find jobs where opportunities are limited. The problems have been confounded by the unwillingness, at least until recently, to cede any control over the purse strings. Local government has been at the sharp end of austerity.

So what might a new northern-focused industrial strategy look like? It should start by seeking to to do no more harm. That means reversing the welfare cuts that are sucking spending power out of communities already suffering from a lack of effective demand. It also means welcoming – and trying to lock in – a more competitive exchange rate.

If the government is serious about reducing net migration to the tens of thousands, Britain cannot afford to have 5 million adults – around one sixth of the employed labour force – lacking basic literacy and numeracy skills. The West Midlands, for example, has been doing well in the past few years but is being held back by a shortage of skills.

But boosting skills doesn’t help the less productive regions if all the newly qualified people head south looking for jobs because there are none available where they live. In parts of the north, higher spending on local infrastructure projects would help by linking smaller towns and cities to the big urban centres. The recognition in the Tory manifesto that the government should both identify the growth industries of the future and seek to locate them across the whole country was welcome.

Welcome but belated. The Conservatives effectively left large chunks of Britain to rot in the 1980s. Whichever party forms the next government now has a massive catch-up jobs on its hands. And precious little time.