PRIVATE equity group 3i is to close its Newcastle office.

The group said yesterday it planned to shed nearly a fifth of its workforce in response to weaker levels of corporate activity.

Seven jobs will be lost at the Tyneside operation, although it is hoped that many of the staff will transfer to its Leeds office, which will now be responsible for the North-East region.

The Newcastle office is one of four in the UK and three on the Continent to close as a result of the economic slowdown.

Other UK operations to shut are Edinburgh, Nottingham and Watford.

A total of 185 jobs will go as a result of the closures.

A spokesman for the company said: "Investment is likely to remain at about the current level for the next year.

"As a result of this and very low staff turnover, fewer people are needed to meet expected levels of investment.

"The Newcastle office will close in the next few weeks, but we are hopeful that the staff can transfer to our other operations. The Tyneside office is one of our smaller operations, and the area can be covered from the Leeds office."

The closures will leave 3i with 36 offices in 16 countries.

In the six months to September 30, pre-tax profits at the group were unchanged at £71m, while valuation of the group's investment portfolio fell by £761m to £5.04bn.

3i saw the net asset value of its investments fall by 23 per cent as smaller company and technology stocks slumped in the six months to September 30.

Total investment in the period amounted to £600m, about 33 per cent lower than last year. About half of this was in technology companies.