ONE of the country's most respected economists has urged North East exporters to wake up to the risks of doing business with Europe or face a "nasty shock" in the year ahead.

The economist behind a major national report published today, which warns that the UK is already in technical recession, has called on the region’s firms to face up to the challenges of breaking into new markets beyond Europe if they are to survive 2012.

Peter Spencer is chief economic advisor to the Ernst & Young ITEM Club – the independent body which produces the only authoritative economic forecast that uses the HM Treasury’s model of the UK economy.

ITEM’s winter forecast predicts national unemployment will rise by 300,000 by the end of 2012 while business investment stagnates amid ongoing uncertainty in the Eurozone.

The report estimates positive UK growth is unlikely until 2013 when UK GDP is predicted to increase from 0.2% to 1.8%, climbing to 2.8% in 2014.

While the report forecasts a 3% rise in exports, it warns this will only be achieved if the private sector can see past Europe and tap into new emerging economies such as India and Indonesia.

In an interview with The Journal, Mr Spencer called on the North East’s exporting businesses to take evasive action and lessen their reliance on European markets.

He said: “Anybody who’s waiting for these European markets to bounce back is in for a nasty shock. The message since the first credit crunch was that the home market is not going to pick up any time soon. You had to get on a plane and start tapping into export markets and at the time Europe looked like quite a good place to start.

“The problem now is that this weakness in the home market has extended to Europe so you have to start looking at other markets further afield.”