Creative solution

He said organisations such as English Partnerships, the North West Development Agency and local authorities needed to `engage' with major developers such as Ask, Muse and Urban Splash, to find a `creative solution'.

"One area has to be of financial risk sharing - because the banks are so wary about funding at the moment - which I think will enable delivery of regeneration schemes.

"The virtual drying-up of debt funding from the banks has been key. If the public sector could inject real equity into projects, as partners, then I think the banks may be more minded to fund projects.

"If we don't try and find a solution, then I think it's going to be a pretty dismal time for regeneration.

"We have a good track record of innovation and trail blazing in this part of the world, and that gives me heart that a solution can be found." Ask, which has delayed two key residential projects schemes, in Salford Quays and Ashton under Lyne, and a speculative commercial development on the Greengate site in Salford, has long-term confidence in Greater Manchester.

Mr Knott added: "On the sites where we have delayed work, we will wait until the tide turns - it may be a couple of years before the banks are in a more positive mode - but I have faith in those sites."

Ask was, he said, in the midst of developing £250m worth of investment in the region, with projects such as the first phase of First Street still underway.

Colin Sinclair, chief executive of Manchester's inward investment agency MIDAS, said he was sure there would be projects falling by the wayside as a result of the economic downturn. He argues that while all regions and cities are affected, Manchester is better placed than many other locations.

He said: "We can't bury our heads in the sand and ignore the wider economic picture. We just have to work twice as hard.

"I think in times like this you really have to play to your strengths - and that is sectors like creative, new media, IT and financial services."

Mr Sinclair said schemes associated with retail were particularly at risk, but the commercial market was proving to be more robust.

"We'd be fooling ourselves if we didn't realise that some projects are going to be postponed.

"But Manchester has a fantastic complementary offer to London - that is why, despite the market conditions, I am pretty confident.

"Our project pipeline is the strongest it has ever been. Our investment bank strategy is progressing well, and we hope to have some very positive news for Manchester soon."

Sir Howard Bernstein, chief executive of Manchester city council, agreed too that, despite the general economic turmoil, Manchester has reason for optimism.

"I think the situation we are in is a blip - it's just a question of how long this will last.

"We are in a difficult economic period, money is scarce, and to the extent that it is available it's usually more expensive.

"In Manchester, our strength is the diversity of our economy."

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