THE rail boom is set to give the UK economy a £40bn boost over the next ten years, according to a new report.

The so-called "railway renaissance", which has seen thousands of passengers forsaking their cars for the iron road, is expected to support 250,000 jobs a year, with the network in line for a prolonged period of rebuilding and investing.

But plans for a significant investment in a high-speed upgrade of the East Coast main line linking the North-East with London and Scotland, which are hastily being assembled for the rail regulator, could swell the latest optimistic forecasts.

The £40bn figure covers investment in projects such as the £5.2bn Channel Tunnel rail link and the £2bn upgrade of the London to Scotland West Coast main line, as well as current plans set out by Railtrack and train operator GNER for the East Coast line.

"The railways are bucking the common perception of an industry in crisis and are now in a particularly healthy state," claimed the report, produced by economic analysts Business Strategies.

The report said capital spending by the rail industry supported 100,000 jobs a year in other industries such as construction, business services, engineering and distribution. Over the next decade, this figure was expected to rise closer to 150,000. With 90,000 jobs in the rail industry itself, the railways and their modernisation will sustain close on 250,000 jobs a year.

Last month the prospect of a 200mph rail route shrinking journey times between the North-East and London and Scotland emerged as the Shadow Strategic Rail Authority kicked off a year-long study to look at where such a route might run.

GNER and rival Virgin East Coast have been asked to submit additional plans for improvements to the link, to cope with an anticipated huge growth in passenger numbers. Experts forecast passengers on the route could rise by up to 60 per cent.

lThe head of Railtrack, which is facing the threat of industrial action over pay by its signal workers, has given up a bonus worth almost £100,000. Gerald Corbett, the company's chief executive, said it would be ''inappropriate'' to take the money in the light of the Paddington rail crash.

He decided not to accept the bonus but insisted that other Railtrack directors keep bonuses of between £25,000 and £37,000