TWO companies which have won a massive defence contract guaranteed to pump millions of pounds into the North-East economy have rejected claims that the project could be delayed by at least a year.

Speculation has been rife in the City of London that BAE Systems and Thales were squabbling over the contract to build two aircraft carriers for the Royal Navy.

The Transport and General Workers' Union's national organiser, Jack Dromey, said: "It is clear the timetable is slipping, and that may be bad news for yards and workers waiting for much-needed work to arrive."

But both companies have insisted the contract is progressing well and is on course to create about 5,000 jobs in the region.

Bosses at Tyneside shipbuilder Swan Hunter, which is expected to be a big winner from the deal, remain optimistic.

Chairman Jaap Kroese said: "I do not think that the programme is delayed. If there was a 12-month delay, we would know."

A BAE Systems spokesman said the two firms were "working really well together".

More than a third of the £2.7bn aircraft carriers project will come to the North-East and is expected to produce significant regional growth, according to experts.

This would mean between £0.95bn and £1.1bn entering the region's economy on the back of one of the largest naval defence contracts awarded since the Second World War.