Newcastle/Gateshead will press ahead with thousands of projects despite failing in its bid to become European Capital of Culture 2008, say civic leaders.
The Angel of the North is a cultural icon on Tyneside
Tyneside - which had been the bookie's favourite - was beaten by Liverpool.
Culture Secretary Tessa Jowell named the city as the European Capital of Culture 2008 on Wednesday.
Liverpool beat stiff competition from five other bidders Newcastle/Gateshead, Birmingham, Bristol, Cardiff and Oxford.
Organisers of the Newcastle and Gateshead bid were bitterly disappointed at the announcement.
They had joined local people and children at West Walker Primary School, in Newcastle to hear the news on television at 0810 BST.
There was a loud gasp when the announcement was made.
The bid organisers had carried out independent research which claimed the 2008 title would have created 24,000 jobs and brought in £2bn to the North East economy.
Sir Ian Wrigglesworth, chairman of the Newcastle Gateshead Initiative, said wished Liverpool well with its success.
He said "It's naturally a disappointment not only for those working on the bid, but for the people of the North East.
"However, we must not forget what we have achieved.
"This is the city and region that is now seen as a model for culture-led regeneration across Europe.
"More importantly for us the North East is on the way up. We are already attracting more tourists than we have ever done in our history."
Gateshead's triple jump gold medallist Jonathan Edwards said: "Personally I feel devastated. It got really under my skin and under the skin of all the people in this region.
Tyneside has invested in public art projects such as the Blue Carpet
"But at the end of the day it is not about winning the bid, but confidence for the future.
"This region, everybody can see is moving forward, changing before our eyes."
MEP Barbara O'Toole said: "Everyone is absolutely gutted and I share that feeling, probably with the rest of Tyneside.
"I have to wish Liverpool the very best of luck.
"The momentum has started and I do not think that momentum will stop today.
"No matter who has the Capital of Culture title in the UK, I think we will always be a European capital of culture here in Newcastle/Gateshead."
The North East Assembly said significant investment in culture had already made a significant difference to people's lives in the region.
Pace of change
Tony Flynn, chair of the North East Assembly, said: "There has been major investment in culture and massive support for the bid from people as far afield as Berwick and Teesside.
"These people are still the winners of the Newcastle/Gateshead bid - investment in culture will not suddenly stop, thousands of projects will still go ahead, and our commitment towards raising people's aspirations in all areas of their lives will continue.
"Apart from massive investment in infrastructure, the region has already benefited from a much higher profile, resulting in more tourists and more business visitors, leading to a healthier economy.
"The bid has acted as a catalyst, speeding up the pace for change, and the benefits are there for everyone to see."