CHOCOLATE manufacturer Nestle is to invest millions in its North Yorkshire operation, despite predicting a tough year ahead.

The company could further boost York’s economy if council planners approve a massive redevelopment of the empty southern end of the factory site.

Nestle says the announcement of its 2011 plans demonstrates its long-term commitment to the city and the 2,000 people it employs.

David Rennie, managing director of Nestle Confectionery UK, said he believed the first half of this year will be the toughest yet for private businesses, with job losses in the public sector, looming tax hikes and cocoa prices at an all-time high of £2,000 a tonne.

“People will have less money in their wallets to spend and it’s going to be hard for business,” he said.

Despite this, the company is planning to invest £1m in extending its Insight Centre, which will stock the full range of Nestle goods.

There are also plans to expand its Product Technology Centre where 120 scientists and technicians work to improve Nestle products.

The company will also launch a new version of the dark chocolate KitKat.

The bar was first manufactured at the York factory when it was Rowntrees. It celebrated its 75th anniversary at the end of 2010.

Elsewhere in the city, a developer has been granted permission to go ahead with its £165m redevelopment of the former Terry’s chocolate factory.

Hundreds of homes, two hotels, shops, bars and restaurants will be built on the site, off Bishopthorpe Road, creating an estimated 2,700 jobs.