The weekly organic market is open: crowds of shoppers mill between the stalls, arms heavy with colourful bags; a queue at the cash machine has started to snake; and workers are enjoying an alfresco lunch despite a sharp northwesterly.

It is hardly a scene of dire panic. But this is Newcastle upon Tyne city centre and, if the latest batch of gloomy financial figures are to be believed, these shoppers should be saving their pennies.

Unemployment in the North East of England is rising faster than anywhere else in the UK, with 15,000 joining the dole queue in the last quarter, to lift the regional unemployment rate to 7per cent.

But when you scratch the surface, you find bright, even brazen optimism. Jenn Richards, 24, a marketing executive from South Shields, has booked a holiday in Ibiza and wants a new wardrobe to go with it. She said: “I'm still spending, although I know I probably shouldn't be.

“I work for a small business in the area and we've yet to see a drop in trade or profits. I'd have to see some real evidence before I started thinking about cutting down.”

Geordies are a famously resilient bunch, of course. You only need to look at the scores of scantily clad revellers who brave the evening cold as they enjoy Newcastle's famous night-life to know that it takes a lot to put them off. But for those who remember the devastating decline of the region's ship-building and mining industries and the subsequent economic collapse in the North East, this cheerful outlook is also one of defiance.

Wallace Robson, a pensioner from the east end of the city, said: “The region was devastated in the 1980s. The mines were closed, the shipyards were closed. But the people of the North East would have to see something more than they are seeing now to make them worry. I don't think things could get as bad again.”

The region has undergone vast regeneration since those dark days. About £40 million has been invested in the city's riverside and another £100 million spent on cultural buildings. Call centres and manufacturing have replaced mines and shipyards. But as the credit crunch hits and with the prospect of 2,000 redundancies at Northern Rock, many at the company's Newcastle headquarters, the fear is that these new industries, so quick to expand, will contract just as fast.

Phillip Drew, 27, a call centre superviser from Gateshead, said: “I can see how workers who have debts or a huge mortgage could be starting to panic but I think call centre jobs are pretty secure.”

The North East Chamber of Commerce is confident in the state of the region's economy. Andrew Sugden, director of membership and policy, said: “While it is a time to be cautious, we should also be cautiously optimistic.”

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