“In the current year we’ve received £613,440 from the council, a sum which has been steadily declining for a number of years,” he said.

“That represents about 6.5% of our turnover, so it’s not a huge proportion but it’s a big sum of money and if the council do withdraw it entirely it’ll be extraordinarily difficult to replace it either through ticket sales or by reducing costs.

“We’re a very slim organisation as it is. We play to audiences about 15% above the national average so we’re almost as successful as it’s possible to be.

“Such a cut would almost certainly have an impact on the level of service we can offer or the programme that we can provide. It is going to be very difficult.”

He said bosses of the city’s major arts organisations would work collectively to combat the effects of cuts. “It’s not about fighting to get on top of everyone else.”

The likely blow to the arts on Tyneside – long considered a jewel in the region’s cultural crown – emerged as Erica Whyman, boss of Newcastle-based theatre company Northern Stage, spoke at a conference at the National Theatre in London.

The event, hosted by National Theatre boss Sir Nicholas Hytner and Oscar-winning film director Danny Boyle, was to highlight the effect of national funding cuts on regional theatre.

Mr Boyle, who masterminded the Olympic Games opening ceremony, said he had learnt his craft in the regions, at Bolton’s Octagon Theatre.

Ms Whyman, who leaves Newcastle at the end of the year to join the Royal Shakespeare Company, said after the conference: “My key point was to say I have fallen in love with the North East and wouldn’t be going to the RSC if it hadn’t been for everything I’ve learnt at Northern Stage.”

She had explained how sustained modest investment in culture had helped to transform the city and region.

“What I had to say about Newcastle City Council’s position is that they are having to make very savage cuts which I sincerely believe they don’t want to make.

“The council have been terrifically supportive and have held onto cultural investment pretty tenaciously in the last couple of years.”

She feared a 100% cut could hit others worse than Northern Stage, which receives about £100,000 annually from the council, some 5% of turnover and equal to the cost of making the Christmas show.

“None of us is suggesting we should be exempt but the depth of cuts to local authorities is too much.

“All these so-called non-essential services are essential to people’s quality of life.

“The savings you make in cash terms in cutting the arts are so tiny compared with the good they can do.”