BUSINESS leaders last night issued an impassioned appeal to Chancellor Gordon Brown to save the North-East's ailing manufacturing industry.

The Chancellor delivers his pre-budget statement tomorrow amid fears of a full blown recession in the region. And industry leaders are pleading with him to offer more support to North-East firms - already teetering on the brink in the wake of the September 11 terrorist attacks in the US.

Earlier this month, unemployment in the UK rose for the first time in a year and, with the North-East's manufacturing sector suffering in particular, some analysts are predicting further job losses on the way.

The region has been hit by several high profile redundancy announcements:

Mobile phone company One2One announced last week that 900 jobs were to go at its call centres, some of which may come from the company's Doxford Park centre in Sunderland;

The Sanyo factory at Newton Aycliffe, where 284 staff have lost their jobs, is to close its doors for the last time on Friday;

More than 100 jobs are to go at the Durham Dairy bottling plant at Langley Moor, near Durham City;

SCA Packaging is to shed 30 jobs at its plant in Darlington;

Further jobs are to be lost at power company Innogy, based in Newcastle, and car parts manufacturer NSK's steering column plant in Peterlee.

North-East exporters have already been hit by the strength of the pound against the euro, which has been blamed for heavy losses at Nissan's flagship plant on Wearside which have a knock-on effect on suppliers such as NSK.

A survey produced by independent analysts Business Strategies predicted further job losses and a fall in investment in the region caused by the uncertainty generated by the terrorist attacks.

Research published yesterday by the Royal Bank of Scotland found three-quarters of directors in small firms in the North-East expected the attacks to plunge the country into recession.

Michael Bird, chief executive of the North East Chamber of Commerce, said: "Things are tough, particularly for manufacturing.

"Following September 11, there is a reluctance of people to invest because they don't know quite what's going to happen.

"In these uncertain times what people tend to do is nothing, so we would like to see some incentives for investment. That can probably be done by making 100 per cent capital allowance permanent for small and medium businesses."

A previously predicted rise in National Insurance contributions is believed to have been shelved by Mr Brown because of fears of provoking recession.

Angus Hynd, assistant regional director of the CBI, said he wanted no "nasty surprises" and no further rise in business taxation from the Chancellor.

"In fact, he should be looking to cut business taxes to give a stimulus to manufacturing," he said.

Paul Nowak, Northern regional secretary of the TUC, said: "We'd like more targeted and more flexible investment to help manufacturers in the North-East overcome the current short term problems, some of which are caused by the downturn in the world economy."

One NorthEast director of strategy, Jonathan Blackie, urged the Chancellor to back businesses in the region.

He said: "We want to see measures that back businesses in the North-East, and encourage growth and innovation.

"We have the expertise in this region to be a world beater, but we need Government support, and a leg up from the Budget, if we are to achieve that."