Ever since the first Scottish devolution push of the late 1970s, council leaders, MPs and industrialists in Northumberland and Tyneside have looked nervously north.

That anxiety and envy – which saw north east England Labour Mps introducing a clause which help scupper the 1979 devolution vote by insisting on 40% of all registered Scottish voters to vote 'yes' for it to pass (only 32.9% did), has deepened since Holyrood's foundation. It is sharpening further with next year's independence referendum looming.

North eastern leaders feel increasingly isolated and unloved: as Scotland wins greater powers and autonomy, the economy of London and the south east continues to accelerate far ahead of Tyneside and Wearside.

So it may seem counter-intuitive, but council leaders in north east England and Cumbria are now being urged to see Scotland's likely increase in autonomy as an opportunity – whether under Alex Salmond's indy lite version of independence or the greater devolution promised by pro-UK parties.

A new report presented to 12 councils in the Association of North East Councils in Darlington yesterday, Borderlands: can the north east and Cumbria benefit from greater Scottish autonomy, asserts that far from being a greater threat, it could bring northern England greater benefits of economic, social and cultural partnerships.

One of its four authors, Professor Keith Shaw, from Northumbria university, said on Friday he wanted to flip the way northern leaders think, to reset their approach. While the report was for councils from Teeside north to the border, the document proposes a coalition which stretches westwards too, to include Cumbria.

Optimistic that this rethink is already underway, with council leaders talking of annual summits with Scottish ministers, Shaw says:

The overall emphasis of the report was to provide a more constructive, positive view about Scotland and how the north east can benefit, because certainly since Labour Mps in the north east frustrated devolution in the 1970s, there is a narrative in the north east which is highly critical and suspicious of greater Scottish powers. Part of the narrative of the report is to refocus the debate in the north east to look at the more positive opportunities. Whatever the undoubted challenges of greater Scottish independence, there's a real opportunity here for the north east that will require a fairly important shift in people's thoughts.

The ANEC has good reason to be worried: under independence, Scotland's economic and tax freedoms – regardless of likely limits imposed by the Bank of England as part of any further sterling pact, would pose a serious additional threat to the north east's already weak economy.

The report, a collaboration between Northumbria, St Chad's college at Durham university and the thinktank IPPR North, quotes Middlesborough mayor Ray Mallon in the Northern Echo stating:

If the economic freedoms that independence would bring further strengthen Scotland's hand, we could find ourselves between the anvil of a government that looks little further than the Home Counties and the hammer of a new "tiger" economy to the north. That won't be very comfortable.

And if Salmond loses the referendum, the pro-UK parties are still promising greater tax and financial powers for Holyrood. Details of what that might bring at this stage are scarce, but under devolution's existing powers, Scotland's capacity to attract foreign investors has already unnerved the north.

Several studies show Scotland's inward investment figures are the second strongest in the UK (another recently showed Wales and Northern Ireland were posting strong increases too) after London and the south east.

North east council leaders are openly resentful of Scottish Enterprise's ability to attract firms such as Amazon and Gamesa to invest, at the expense of the north east.

The report states:

Some politicians, local agencies and the media in northern England are increasingly expressing concern about the growing political and economic strength of Scotland. It is viewed as already having powerful political and economic development organisations, the capacity to speak with a single voice, and the possession of 'soft power', which enables the exercise of influence in formal and informal negotiations with UK and EU decision-makers. The presence of the Secretary of State for Scotland in the UK cabinet, and the role of a separate Scottish government European Union office in Brussels, in addition to its membership of the UK's EU representation, contributes to the asymmetry in institutional capacities between Scotland and sub-national areas in England. There are also concerns developing in the north of England that the UK government will 'bend over backwards' to reward Scotland, so as to highlight to voters the benefits of Scotland remaining in the union.

It states there are several areas of common interest:

° geography and place: creating a new "Borderlands" identity for councils on either side of Hadrian's wall and the Cheviots, so Northumbria, Cumbria, Dumfries and Galloway and Scottish Borders can build new tourism offers;

° shared economic strategies, with northern England's local enterprise partnerships working with Scottish Enterprise to collaborate on transport, rural development, renewables, oil and gas and universities.

° forming a new coalition on transport links, championing the northern extension of the new high speed rail network, improving the east coast mainline and cross-border local rail services.

° trying to protect the north of England against the damaging impacts of greater Scottish tax independence, such as taking control and then cutting air passenger duty, or getting control of and then cutting, corporation tax. The argument runs: if they're good for Scotland, why not the north? So make common cause with the Scots.

This report's authors believe that approach shows greater maturity and intelligence: given its relative geographic isolation and distance from London, the north east should be forging strategic alliances with neighbours north and south.

But it raises too intriguing narratives for both Scottish nationalists and British unionists, for precisely the same reason.

For Salmond and the Scottish National party, that kind of cross-border allegiance would support his assertion that after independence, Scotland's social and economic bonds with England would be able to deepen and grow.

It's a proposal which goes further and deeper than the facetious notion from SNP MSP Christine Grahame several years ago that Berwick might vote to join Scotland. And in fact it is proof of Salmond's wider influence: this report is clear evidence that Scotland is now an alternative centre of power within the UK.

For the pro-UK side, creating tighter and closer cross-border links ought to prove the enduring strengths of the union, underlining the shared interests beyond national identity. (After all, before the Scottish and English nation states emerged, a kingdom stretched from the Lothians south to the north east. But then came the violent cross-border cattle raids of the Border Reivers era).

For some involved here, privately they wonder whether Whitehall officials merrily slashing back the area's regional development agency and council funding have been sharp enough to see that. Whitehall's neglect increases Scotland's comparative power and influence.

Shaw is keen to warn that a new alliance between the Geordies and the Scots is no magic bullet for the north east's economic problems. The answer there still lies with Whitehall and Westminster, and with the north's own people, and with the proposition that England itself needs to be "rewired" to better serve all its regions.

In fact, not so subtly, this also may give the north east greater leverage with London:

Whatever happens, this isn't a panacea, working better with Scotland or working better with Cumbria. [It] is not a mutually-exclusive strategy. It does give the north east of England and Cumbria a bargaining chip with Whitehall.

The Journal newspaper in Newcastle quoted South Tyneside council leader Iain Malcolm saying:

We have to start looking north. It is increasingly clear that we cannot just look to London for growth. While setting up yet another talking shop is not the answer, the councils of the region need to be working towards an annual summit with Scottish counterparts so issues can be raised with Scottish ministers.

It is, Malcolm and Shaw would argue, just pragmatic common sense – a 'win win' for the north.