Demos has discovered that the world's first industrial city has shed its outdated gritty image to become top of the Boho Britain index. It used three indices to reach its conclusion - the combination of its gay-friendliness, ethnic diversity, and the number of patent applications per head of population.

Manchester has an international reputation for its gay village, around Canal Street, made famous by Channel 4's Queer as Folk. The city will host Europride later this year, which is expected to attract more than one million visitors to the festival in August.

The regeneration of Manchester, since the city centre was virtually rebuilt following the IRA bomb seven years ago, has contributed to a surge in creativity. Last year's successful Commonwealth Games has also brought a new confidence to the city.

Manchester is also rich in architecture, with its neo-gothic town hall and university buildings and its old warehouses, some of which have been converted into loft apartments.

It has a large and thriving student population with three universities - the University of Manchester, Umist, and Manchester Metropolitan University. Next year, Umist and the University of Manchester will merge to create a "super university".

On the edge of the city, Rusholme's neon-lit "curry mile" is like the Las Vegas of the north-west. More than 10,000 people a week eat there.

According to the Boho Britain creative index, the next most creative cities in the UK are Leicester and London.