Page last updated at 09:55 GMT, Friday, 23 January 2009

Region is unemployment blackspot

By Ian Reeve
Business correspondent

Nissan plant at Sunderland
The Nissan plant in Sunderland announced it was shedding 1,200

Anyone still in any doubt about the severity of the economic downturn that has now, officially, turned into a recession, should bear in mind a recent comment by Nissan boss Carlos Ghosn.

We are, he said, in a "crisis that is brutal, global and of exceptional size".

He even likened the current climate to the Great Depression of 1929.

And looking at the state of the North East it is hard to disagree with that apocalyptic assessment.

The region has the unwanted accolade of being the country's unemployment blackspot.

Upward trend

The rate of unemployment in the North East is 8.2%, compared with a national average of 6.1%. In addition, jobs are being lost at more than four times the rate that they are in London.

Over the coming months the upward trend is set to persist, as the 1,200 job cuts at Nissan's Sunderland plant and the 150 at Newcastle Building Society are collated in the next round of statistics.

The region will also take its share of pain from national companies which are either in trouble or have disappeared from the corporate landscape. Hundreds of former Woolworths workers will boost the unemployment tables.

What, then, can be done to alleviate the problems that the recession will throw up?

The region features in the government's strategy to get out of the economic predicament, so it is borrowing money to spend on capital projects - things like building roads, bridges and tunnels - all of which will keep people in jobs.

Cash flow problems

On a narrower scale, the region's three development agencies (RDAs) have diverted 10m each from their budgets and set it aside specifically for small and medium-sized business to access.

The aim is to help with cash flow problems if banks are declining to lend, and either keep businesses afloat or help them expand and create much-needed jobs.

The Confederation of British Industry, the employers' organisation, says that the biggest issue for its members in the North East is getting access to finance, and in this the RDA money might make a difference.

However, in spite of the help on offer a survey carried out for the mobile phone company Orange found almost half of small firms are drawing up plans to cut staff this year, with 43% saying they will have to lay off workers.

This leads to fears that the RDA assistance might end up being a futile gesture.



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