A LEADING economist said the North-East was well placed to come through the economic downturn because of its manufacturing base, although it could face some short term difficulties.

Roger Bootle, a well known media commentator who was one of the Chancellor's panel of independent economic forecasters under the last Conservative Government, said the region would be one of the comparative winners over the next few years because of manufacturing.

However the managing director of Capital Economics, which advises the Commons Treasury Committee, warned the region faces challenges from the public sector cuts and problems in the euro-zone which could impact on exports.

Mr Bootle, who was in the region to speak at the North East Business Dinner organised by Deloitte, to which he is an economic advisor, said: "The North-East is quite well placed regionally for once. In the UK it is going to be one of the comparative winners and it is to do with manufacturing and exports.

"The North-East has a disproportionate share of manufacturing and it is no secret that it is a side of the UK economy that is doing well and is going to continue doing well, that is why I think you are getting a fair bit of good news."

Last week it emerged that the North-East delivered its third highest total for exports on record in the second quarter of the year, which had followed two successive record breaking quarters

The figures, released by HM Revenue & Customs, were largely driven by manufacturers.

Mr Bootle warned however that there could be problems for exporters driven by the present difficulties in the euro-zone.

He said: "I think people should be soberly concerned by things that happen in the euro-zone. On the one hand we can pat ourselves on the back that we didn't go in, but we will still be severely affected by what goes on.

"Our exports, including this region, go very heavily towards Europe, so it is bound to adversely affect our exports. I think that is a serious, serious concern."

Another cause for concern was the impending public sector cuts that Mr Bootle felt hadn't started to bite yet.

He said: "There are a high proportion of public sector jobs in the region, but it hasn't really hit yet. A lot of people haven't really felt that much of a squeeze yet, a few have but quite a lot of people haven't.

"That is partly because although unemployment has gone up it hasn't gone up as much as we might have expected, compared to previous downturns it has all been quite mild.

"Meanwhile as far as mortgages are concerned there are low interest rates.

"If you are in your job your pay might not have gone up by very much but your mortgage payments have gone down dramatically so you are OK.

"The financial markets are jittery but the reality is people's jobs and spending and so on and so forth hasn't got to that yet."

The good news for mortgage payers was that Mr Bootle did not think interest rates would go up again from their record low for some years to come.

He added: "When we first got to this level of low rates I said then I thought we would have this low level of rates for five years.

"Back then that was thought to be off the wall, but now the markets have finally come around to my view and reckon the rates will be at this level for another two years. It could even be three or four years."