THE closure of a distribution depot could have a serious effect on a town's economy, local authority chiefs warned yesterday.

British Telecom is considering axing its Northallerton depot as part of a nationwide review, with the loss of as many as 200 jobs.

National officials from the Communication Workers Union attended a meeting of staff yesterday after it emerged closure was one of three options under consideration by the company, along with scaling down operations and letting another firm run the depot.

The Darlington Road depot is the fifth largest employer in the town, after North Yorkshire County Council, Hambleton District Council, The Friarage Hospital and the Ministry of Agriculture, Fisheries and Food.

Hambleton's economic development officer Mick Jewitt said: "It is one of the major employers in the town and we would be concerned about the economic impact.

"We would also be concerned about the individuals involved and that they should have an opportunity to regain employment locally."

He said if the depot did close the size of the warehouse may make it difficult for another company to move in without demolishing it.

But he said the council may be interested in acquiring the land, which is designated for employment use.

He said: "Given the size and nature of the building it is not easy to envisage it being used by another single employer and it may be that we need to look at clearance and rebuild.

"There is a shortage of employment land in Northallerton and, if it became available, we may look at it."

A BT spokesman said no decision on the future of the depot had been taken, but confirmed its future was under review.

He said: "The unions have been kept informed and we expect there to be a report on the review in September or October."