The Yorkshire economy is expected to deteriorate faster than the national average in 2009, according to the latest update from the Yorkshire Bank’s parent group, National Australia Bank.

It forecasts that the economic downturn will continue well into next year following a sharp decline in 2008.

The report states: “After a strong performance in 2007, the Yorkshire economy has deteriorated sharply in 2008. Activity has eased across all sectors, the unemployment rate is increasing and house prices have retreated from their record highs. The downturn will continue well into 2009.”

Regional growth for 2008 is expected to be no more than 0.25 per followed by a decline in activity of between 1.5 and two per cent in 2009.

Economists at NAB say that activity in the private sector is contracting due to falling demand, which has hit manufacturing and construction badly.

Employment had fallen, with the unemployment rate rising by more than 1.75 per cent since the beginning of the year and expected to rise further next year as more jobs are axed.

Conditions in Yorkshire’s private sector labour market were weaker than most other UK regions in the three months to November 2008.

Yorkshire’s manufacturers and services providers suffered from deteriorating conditions with balances for sales and orders in both domestic and export markets falling into negative territory.

Investment balances in plant and machinery also turned negative.

Confidence in turnover, although still positive, also dipped sharply and profitability fell heavily. Less than one-third of companies reported they were operating at full capacity.

The report states: “The downturn will gather pace in 2009, with a contraction in growth expected in both Yorkshire and the UK, followed by a gradual pick-up in activity in 2010.”