A WORRYING number of companies with operations in the region claim they could stop investing in the North-East if the UK does not join the euro this summer.

Those companies employ more than 9,000 people across the region and 28,000 across the UK.

The findings are the result of a survey of 40 international companies carried out by The Financial Times.

Almost half of the companies in the survey claim they would be less likely to continue investing in the UK.

They include the likes of NSK Bearings in Peterlee, Komatsu in Birtley and Philips in Durham and Washington.

The feelings of Japanese car firm Nissan are well known. The company's president Carlos Ghosn has made no secret of the fact that failure to join the euro could hit future investment at its Sunderland plant.

Black and Decker has already cut its workforce at Spennymoor by 950 posts, as a result of moving production to the Czech Republic.

Most argue that they would be in a better bargaining position with their corporate headquarters across the world, for future investment in the UK, if it was in the euro.

But a few, such as US engine company Cummins, which employs 750 in Darlington, and Swedish firm Electrolux, in Spennymoor, employing more than 900, refused to be drawn on the issue, preferring instead to remain neutral.

However, the survey paints a bleak picture for the future of UK manufacturing if the Government continues to ignore euro entry.

It comes a day after the Treasury published a report criticising the pace of European Union economic reform.

The report warned that the pace must be stepped up if the single currency was to be a success. It comes less than four months before the deadline for the Treasury to complete its assessment of the five economic tests for euro membership.

The Financial Times survey raises a real fear that many of the big foreign investors in the region will shut up shop and move to cheaper production plants in Europe.

But Anthony Platts, of North-East stockbrokers Wise Speke, said many companies were relying on Britain's non-euro currency membership as an excuse to move to cheaper production overseas.

He said: "Some companies could be using the euro argument as a chance to move production abroad, without offending their current host nation. The euro is being used as a smokescreen to move to cheaper production abroad."

"I do not see the argument for joining the euro as a legitimate one, because of the sheer size of the foreign currency market in London.

He said: "Sterling is still a widely traded currency on the foreign exchanges, and London remains a major centre for currency dealing."

Ray Hudson, chairman of the International Centre for Regional Regeneration and Development Studies at Durham University, said labour costs were the major issue when companies were considering future investments.

He said: "Labour costs in the UK are four to five times higher than in places like Poland and the Czech Republic.

"Many companies are moving into cheap labour markets in Eastern Europe in anticipation of those economies joining the euro at a future date, and growing their markets as a result.

"At the moment, however, their labour costs remain low, and make good bases for companies wanting to get highly-skilled staff very cheaply.