THE economy and immigration are two of the battleground issues where the election will be won and lost.

But immigration control and the future of Britain's ties to Europe are areas where North-East business leaders and the electorate stand poles apart.

Business is strongly pro Europe, which makes sense when you consider that almost half of the region's export business is done with EU members, supporting an estimated 140,000 North-East jobs. In addition, many of the region's businesses benefit from EU funding.

The Open Europe thinktank this month warned that a unilateral UK exit could lead to a permanent dent in the country’s GDP of £56bn by 2030.

Recent polls, however, show only 45 per cent of Britons would vote to stay in the EU, and a survey last month by the Press Association said that one in three people believed none of the main political parties - including UKIP - had appropriate policies to limit immigration.

Mike Matthews, boss of plastic parts manufacturer Nifco UK, one of Teesside's biggest success stories of the last five years, believes it would be "business suicide" to quit the EU. The region’s major companies – including Nissan, GSK, Hitachi and steelmaker SSI - fear that an all-out exit from the EU would have a devastating impact on jobs and investment.

There appears to be broad agreement, however, that the terms of our EU membership need to renegotiated in order to maximise the benefits of being part of an economic bloc larger than the US and Japan combined.

UKIP's commitment to an in/out referendum on Britain's EU membership, along with its determination to control immigration, are seen as the party’s trump cards. Nigel Farage has forced them onto the agenda with such vigour that all of the main parties have been forced to react.

But this month Ukip ditched its plan for a 50,000 cap on annual net migration, saying that such a promise would not be believed by the public. The move followed the Conservatives’ failure to hit their target to bring net migration below 100,000 a year. Mr Farage announced the party would not set an arbitrary target because of a “changed emphasis on policy away from caps, a culture which is now discredited." Opponents said it was an example of Ukip's headline-grabbing ideas struggling to survive in the real world. George Osborne, accused Mr Farage of making up immigration policy as went along.

George Osborne has said cutting migration to tens of thousands was the party's ambition for the next Parliament, but declined to say it was a promise.

Under other Tory plans, migrants will be barred from claiming benefits such as tax credits and housing benefit for four years, as well as having entitlement to social housing reduced. Those from within the EU will also have benefits entitlements curtailed and will no longer be able to send child benefit to youngsters living abroad.

The last Labour government’s policy on immigration boosted the population by 3.6 million, according some estimates.

A referendum on the EU under a Labour government is unlikely according to Ed Miliband, who said that there was an overwhelming economic case for EU membership.

But Labour has said migrants will not be able to claim benefits for at least two years. Border controls will be strengthened, plus an extra 1,000 border staff, making it easier to deport foreign criminals and stop illegal immigration.

Nick Clegg has been a vocal supporter for immigration. He has insisted that the Liberal Democrats are never going to mimic the likes of UKIP by "scaremongering, the immigrant-bashing, the seductive promise that all our problems will disappear if only we shut up shop and stick a ‘closed’ sign on the door."

But where recovery is being felt more slowly, such as in the North-East, the threat, or the perceived threat of cheap foreign labour, remains a sensitive, and politically-charged issue.

PANEL.

Conservatives: Hold referendum on Britain's membership of the EU by 2017, after negotiating the return of some powers from Brussels.

Make migrants wait 4 years before they can claim certain benefits. Bring net immigration down to below 100,000 people a year (now 243,000).

Labour: Push for reform of EU and prevent Britain from "sleepwalking" towards exit. Stronger border controls to tackle illegal immigration. Targets to reduce low-skilled migration but ensure university students and high-skilled workers are not deterred.

Lib Dems: Push for greater EU efficiency. Reintroduce exit checks at borders, so the government can identify people who are overstaying their visa. All new claimants for Jobseekers Allowance to have their English language skills assessed.

UKIP: Leave EU. Introduce Australian-style points policy, used to select migrants with the skills and attributes needed to work in the country. Priority lanes for UK passport holders. Tougher English language tests for migrants seeking permanent residence.