Region's economy may pay price for South's spending

The North East Chamber of Commerce (NECC) said relentless growth in the region had eased back, after evidence that the "fire" has been taken out of the area's economy.

And the concern among business leaders is that further interest rises in the near future would have a "catastrophic" impact on the North-East, according to the NECC.

The employers' organisation's quarterly North-East Business Barometer showed that the top three concerns among businesses were interest rates, inflation and energy prices.

Maggie Pavlou, NECC president, said: "The North-East business community has risen admirably to the challenge over recent years and we are rightly proud of the giant leaps we have taken to grow and create jobs and prosperity.

"But we are deeply concerned that London sneezes and we are left with a full-blown cold.

"Our region cannot be left to pay the price for massive bonuses in the City and a rampaging housing market.

"It is economics of the mad-house to use interest rates as the sole dampener on extravagances elsewhere, when it could have such a damaging effect on all the good work ongoing in the North-East.

"We have emerged from the begging bowl mentality of the past, we have regenerated and we are now a region that is outstripping comparative areas on the continent.

"The Government must recognise this and ensure we are not kicked back to darker times, when the only way out was through the Treasury's purse."

Despite an easing back in the economy, the North-East is still performing far better than it has for many years.

Miss Pavlou, who is also HR director of Newcastle-based Parkdean Holidays, said: "Make no bones about it, the figures released today are still extremely positive with growth well above where we were four or five years ago but we need to send a strong message to Government ministers that it is in their best interests to ensure we don't take a backward step."