CHANCELLOR George Osborne has been urged to address the threat to the North East economy after 900 would-be Tyneside jobs went to Scotland.

North Tyneside elected mayor Linda Arkley has written to cabinet ministers warning that the region’s economic recovery will be undermined if Scotland is allowed to offer lower taxes while at the same time possessing a multi-million fund to tempt in new firms.

Her warning comes after it emerged internet book supplier Amazon ditched plans to open a new customer service centre in North Tyneside and instead choose Edinburgh when the company secured a £1.8m grant from Scottish Enterprise to train new staff. The company said help from Scotland’s dedicated business support group was an important part in its decision.

Scottish threats to the North East economy first emerged last month, when offshore energy firms said a Treasury consultation on handing First Minister Alex Salmond the ability to lower corporation tax would undermine efforts to support the sector on Tyneside.

The banks of the River Tyne are host to a large section of the North East enterprise zone, offering five years of lower business rates and increased capital allowances for manufacturing firms likely to set up there.

Last month it was chosen as the location by the council leaders and major employers forming the region’s local enterprise partnership.

North Tyneside Council would not comment on the Amazon snub, but Mrs Arkley has released letters sent to the Department for Business and the Treasury over the summer warning of the need for a level playing field.

In her letter she said: “Given the North East’s proximity to Scotland, their ability to offer incentives and have powers over levels of corporate tax, in addition to further levers to drive forward economic growth, represents a significant threat to our moves at a local level in North Tyneside and across the local enterprise partnership area to attract businesses to invest and bring jobs to the area.