DESPITE the immediate gloom surrounding the loss of 1,100 steel jobs, the long-term future of the North-East economy will be more secure as a result, a leading economist predicted last night.

The decision by Corus to shed jobs on Teesside is being viewed locally as a bodyblow to an already depressed area.

But Andrew Harrison, principal lecturer in economics at the University of Teesside, believes the regeneration package announced yesterday will allow the region's economy to diversify and make it stronger in the long-term.

"We need to move away from heavy industry and move into the service sector industries because the area is still too dependent on manufacturing," he said.

Mr Harrison added that he believed that while the Corus announcement was bad news for traditional employment, Teesside had to change for the future.

The area was losing out because of global over- capacity in the steel industry.

He said that in the short-term call centres would help the economy, but he doubted they would prove a long-term success as a major employer in the Tees Valley.

Mr Harrison said the Teesside landscape would change drastically with the proposed developments.

"Some parts of Teesside are dominated by huge industrial complexes and this will create a more pleasant environment for ordinary people rather than a view of lots of heavy industry.

"All of this is very good for Teesside in the long term, but it depends how successful the service industries will be."

Despite the disappointment over the end of the campaign to save steel jobs, the local reaction to the regeneration package was broadly favourable, particularly with regard to the possible development of a light rapid transport system for the area and the continued development of the Wilton Centre.

Councillor David Walsh, the leader of Redcar and Cleveland Borough Council, said the transport system would help the competitiveness of local industry and aid mobility. He said it was a "physical symbol of modernity and social cohes- ion."

Ashok Kumar, MP for Middlesbrough South and East Cleveland, said: "The Wilton Centre is the biggest concentration of professional engineers and scientists in the entire North-East and is absolutely crucial to the continued development of Teesside's chemical industry and process engineering base."

But Coun Walsh added that there needed to be support for the reclamation of derelict land in and around the steel works.

"We cannot let this land stand idle as a reminder of a steelmaking past."