THE outlook for the world economy was bleak before the recent terrorist attacks on the US.

That was the message from economic advisor Roger Bootle at the inaugural Deloitte & Touche North-East businessmen's dinner in Newcastle.

But he told the assembled business leaders from the region's top companies that he still expected the UK to avoid a recession.

Mr Bootle, a former chief economist at HSBC, said the events of September 11 had changed the future and that, rather than a soft landing, the world economy was heading for a crash.

He said: "The stockmarket had been on the rise since 1995 and it simply couldn't last. The events of September 11 proved to be the catalyst for a fall in the world markets."

But he said international companies, particularly airlines, were using the terrorist attacks on the US and the uncertainty that followed as an excuse to axe jobs.

He said: "Airlines in particular have moved to cut staff in the wake of the terrorist attacks. It was simply easier to blame that, than accept that they were going to have to make redundancies anyway.

"There was already a huge dip in confidence before the attacks. Bombings don't start recessions. There was going to be a recession anyway, regardless of the events of September 11."

However, Mr Bootle did have some positive views.

"The future won't be as bleak as everybody expects it to be," he said.

"Interest rates will continue to be cut. They will come down as far as they need to halt the decline."

He added: "I don't think the UK will go into recession because of the level of consumer spending. The consumer will buy us out of a recession."

But he sounded a note of caution over the single European currency.

He said: "What the UK Government shouldn't do is panic and join the Euro. We must get the pound at the right level before we join.

"The UK could be better off moving closer to the US than Europe.

"If the UK does join the Euro, it will be a Conservative Government that takes us in, so I'll let you guess how far away that will be."