What a week: Northern Rock, Alcan and growing job gloom

Alcan in Lynemouth
Image caption Alcan's aluminium smelter in Northumberland will close with the loss of 500 jobs

It's been a turbulent week for the North East's economy.

On Wednesday Labour leader Ed Miliband was handed a PR gift on his visit to the region.

First came the announcement that unemployment in the North East had increased again, remaining the worst in the country.

Then the news broke that Alcan would be shutting its aluminium smelter in Northumberland, with the loss of 500 jobs.

Neither perhaps were a great surprise.

High unemployment

It appears at the moment that rises in unemployment are entrenched for some time to come.

The increase of 20,000 in the three months to September took the jobless figure in the region to 146,000 - a 17 year high.

And the figures suggest it's a bad time to be young or a woman in the North East job market.

More than 13,000 under 25s are now reported to be out of work in the region.

And the most marked increase in joblessness is amongst women - many of whom were employed in the public sector.

The IPPR North think tank says female unemployment has increased by 23% in the North East in the last 12 months.

Struggling business

The demise of Alcan's smelter has also seemed to be on the cards for some time.

The firm warned for months that it would struggle to make the business pay because of extra environmental costs.

The government's plan for a carbon floor price might have been the final straw, although the firm doesn't seem to be prepared to wait to see whether the Chancellor might have compensated energy-intensive industries in his Autumn Statement.

Image copyright AP
Image caption Northern Rock's name will disappear from the high street but staff will keep their jobs

The other big economic news was the sale of Northern Rock.

And there at least was some good news in that for the region.

New owner Virgin Money has confirmed it will retain the bank's headquarters in Newcastle.

It has also said that it won't make any compulsory redundancies for three years.

It will also keep donating some of its profits to the charitable Northern Rock Foundation.

North East icon

The sale has been largely welcomed by the North East's Labour MPs but with some qualifications.

Newcastle North's Catherine McKinnell said: "Whilst this is good news for jobs, it's disappointing that the government have decided not to go down the remutualisation route, as this would have been a clear way for ministers to demonstrate that it's not 'business as usual' for the banking sector.

"The loss of the Northern Rock name from the high street is also a real blow, having been an iconic North East brand for almost 50 years.

"However, I welcome the news that Virgin Money have pledged to keep their headquarters in Newcastle, and that no compulsory redundancies or branch closures will take place in the coming years."

There have been questions about the timing and wisdom of the deal, with estimates that the taxpayer may have lost at least £400m.

Image caption Newcastle North Labour MP Catherine McKinnell regrets that Virgin won't retain the Northern Rock name

Labour has questioned whether it would have been better to wait, but the government insists the taxpayer and the North East have got a good deal.

But although the immediate future looks good, Virgin Money will clearly have no long term emotional link to the North East.

That means there will be some uncertainty beyond the first three years, but then I suppose that's true of any business.

Things certainly look brighter for the workforce than they did when the bank first got into trouble.

There is though one group who will still lose. That's the Northern Rock shareholders, including thousands of them in the region. This deal does nothing for them.

At the moment it also won't help the unemployment figures.

A recent report by IPPR North suggested the North East had actually seen a contraction in private and public sector employment.

As long as that goes on, the growing gloom will not lift.