DESPITE entrepreneurs such as Duncan Bannatyne soaking up the limelight on national television and promoting the high-life, the rate of business start-ups in the North-East still remains at a historic low.

Add to that a cocktail of skills shortages, productivity issues and high unemployment levels, and the mix looks increasingly bleak for the regional economy.

This week is Enterprise Week across the UK. It is a celebration of all things entrepreneurial, a push to those with ambition to start on the path to business success.

But Bill Midgeley, North-East businessman and president of the British Chambers of Commerce, told industry leaders recently that the region was suffering from too many generations of working for other people.

This reliance on big employers in traditional industries has led to a lack of aspiration, he told Teesside Business School.

A massive transformation has taken place since the 1970s, when those traditional employers - steel, coal and shipbuilding - ebbed away. Now, most private employment comes from small businesses.

Small businesses are responsible for half of all UK jobs and wealth, and are crucial to future economic success.

But while London has the highest rates of start-ups, the North-East and Yorkshire are below average in both growth of business numbers since 1997, and start-up rates.

In fact, a report by the Confederation of British Industry (CBI) last month showed a growing North-South divide in business start-up rates.

George Cowcher, chief executive of the North-East Chamber of Commerce (NECC), said: "We are a small region here, with 2.5 million people, and it is a smaller marketplace than anywhere else in the UK, so setting up in business in the North-East is tough.

"If you can do it here, you can do it anywhere.

"London and the South-East, for example, has 20 million people there, so there is a huge market for small businesses on the doorstep. Also, there are not huge amounts of capital in this region, and often you need capital to give the business a kick-start."

But Alan Hall, of manufacturers' organisation the EEF, said: "I think it is difficult to teach someone to be an entrepreneur. We can teach people to look for the sense of business opportunities, and business skills, but we can't teach them to actually be an entrepreneur.

"All we can do is make sure the regional economy is burning bright to give these people the best possible chance of business survival."

Mr Hall says the skill levels of the North-East workforce is reaching crisis point - and that this may be exacerbated by the Olympic factor. Construction is already hard-pressed, without its key workers being lured from major North-East developments to London to build stadiums for the 2012 games.

Alan Clarke, chief executive of One NorthEast, said: "Many more skilled workers are needed in the North-East if the region is to seize the opportunity new technologies and the global economy present.

"We have always had a hard-working and adaptable workforce, but too often employers tell us there are simply not enough workers with specialist skills to fill the posts essential to the future well-being of their businesses."

One NorthEast has launched a skills action plan, and is spending £500m on skills every year.

The NEEC and CBI have also linked up on the Aspire campaign, which aims to reinstall the sense of worth in the region's young people and to give them the ambition to aim high.

Professor John Wilson, of Teesside Business School, said the Government's aim of getting more young people into higher education could contribute to the problem.

"We will then have skills shortages at lower levels," he says.

Modern apprenticeships are considered by all business leaders to be the answer to the skills problem, but investment in skills needs to be public sector-led.

However, many businesses are reluctant to invest in skills, when, particularly in manufacturing at the moment, margins are low.

Prof Wilson said: "I think we sometimes kid ourselves that our level of economic performance is something other European countries aspire to, but they are overtaking us because they are prepared to invest more in productivity."