It is a strange statistic. It sounds spurious. But nevertheless it is trotted out locally with dead-pan confidence: 70% of Japanese computer games are designed within a 30 mile radius of Liverpool. Forget the wit and the tourists on their Magical Mystery tours. Liverpudlians now live and work in an e-port, churning out computer games, software and web designers at a rate that suggests the creative juices of the north-west are flowing as fast as they have for decades.

And just a glance at the new structures of steel and glass springing up around the old docks says this City has got a serious case of the new economies.

Further evidence of such can be found in the car park outside Psygnosis, a world-leading computer games developer which is based in Liverpool's Wavertree Technology Park.

There's a Porche Boxster, a dozen BMWs. various4WD's and a scattering of MX5 coupés. Most of the models are owned by the majority of twenty-something whizz kids who make up Psygnosis's 220 staff.

"Our staff are quite well paid compared to the average Joe out there," said John Bickley, general manager at Psygnosis. "They have a disposable income and we have helped play a small part in the rejuvenation of the Liverpool economy which is definitely on the up. It's almost literally every month now that new bars and restaurants are opening up, which to me is a significant sign of economic resurgence."

Life - one of the growing number of trendy bars and restaurants in Bold Street - is one of the popular haunts for both the "techies" and the stars of the local soaps, Brookside and Hollyoaks.

Meanwhile, penthouses are selling in the dockland renovated loft warehouses for £500,000. Unlike London, however, you can still buy a three bedroom semi for between £60,000 and £130,000. A £60m investment has also been announced for five 40-storey buildings along the city's river front.

"Obviously the new technology-related businesses are fast growing and a very important aspect of our regional economy," said John Burrows, the North-West Development Agency's business development director. The agency is now fielding 300 inquiries annually from large hi-tech firms, which are considering investing in the area and want to rationalise their European operations.

Sony saw the potential early and bought Psygnosis back in 1993 to support its Playstation business. The local firm's latest big project is updating the Formula One game for the Playstation2 which has already been released in Japan and is expected in the US and UK later this year.

Now a queue has formed to follow Sony's Liverpool lead. The French games giant Infogrames has also been drawn in to the hub of creativity and bought another gaming group, Ocean.

Another of Europe's largest games developers, Rage Software, is also based on Merseyside - but has remained independent, with a full listing on the London stock market.

The growth of hi-tech business has helped to offset the demise of manufacturing and port industries which drove unemployment in the region to almost 20% in the depths of the recession in the early 1990s. The latest figure is 9.5%. It has also lifted house prices, boosted new restaurants and bars - and left salesmen at glitzy car showrooms rubbing their hands with glee.

Almost £1bn in investment finance from the European Development Fund has contributed to Liverpool's economic revival and its increasing attractiveness to business.

But Pete Fulwell, who lectures at the Liverpool Institute of Performing Arts and acts as a digital industry adviser, warned that new funding needed to be spent wisely for the region's success. "It's the beginning of something really important in the next five years in this area and we've got to get the next round of European Development Funding right. That will see us continue to grow in the next 50 years," he said. "Otherwise we will carry on the old depression and fault lines."

While the north-west doesn't have London or Heathrow on its doorstop to lure the likes of Microsoft, the half-hour drive to Manchester's international airport is almost as adequate, says Burrows.

The argument of a better quality of life goes a long way with many of the companies which have decided to locate in Liverpool and the surrounding area. Housing is cheaper than in the south-east, commuting is easy and there is a thriving cultural scene. And of course Liverpool is one of the few British cities apart from London with what amounts to a world brand.

Amaze, an internet company that emerged from Liverpool University and which now employs 125 people, does not consider its location a disadvantage. Stuart Melhuish, chief executive of the web design and software company, admits Liverpool can be a difficult location for long-distance travel.

But he adds: "We are in the e-business, location isn't necessarily an issue. The reality is with our client handling skills we can work with customers remotely." It boasts clients such as pharmaceutical group Warner Lambert, Saatchi and Saatchi and Volkswagen.

Melhuish said a lot of Amaze's employees were graduates - and the company relied on the surrounding universities, which he listed as a major plus for the region. "Creativity is definitely one of the region's strengths," he said. "Finding a way to ensure that talent pool stays in the north-west is the difficult thing."

The region has to entice more government and venture capital funding into the area - and ensure that support is provided for local entrepreneurial flair.

One example of how the area can be bypassed was provided by BT. The initial roll-out of ADSL - the new technology that provides high-speed internet access using ordinary telephone lines - did not include Liverpool, even though it could be crucial to many local hi-tech firms.

But many of the e-businesses in the city are serving world markets, rather than just the UK, says Melhuish: "Liverpool has a much greater chance of success in Europe than it does within the UK ... there are a lot of cities like Liverpool across Europe that are trying to produce sustainable economies."

Even so, the area is still competing with centres like Cambridge and the south-east which have attracted large foreign investment and become powerful economic regions. The clusters of new businesses in Liverpool are small by comparison and need commitment and continued government backing to achieve anywhere near the growth of their counterparts in the south.