Nigel Tomlinson, chief executive of Sheffield Chamber of Commerce, said he believed the city could avoid a repetition of the devastation of the 1980s and early 90s when heavy industry collapsed.

"We are treating this situation as cautious but not critical," he said.

"The big change from the last recession is that we have not put all our eggs in one basket and the city does not rely on one industry, such as the steelworks.

"Never again will we go back to relying on one huge industry. Confidence is fragile but I have not come across anybody using the term recession or panicking."

Mr Tomlinson briefed councillors on the economic climate in Sheffield at the council's monthly meeting on Wednesday.

He was joined by council chief executive John Mothersole in maintaining that the city could withstand the economic storm, especially through a united stand by the public and private sectors.

Mr Mothersole said: "It's a triple hit. There is declining global demand, the credit crunch and high food and energy prices which has an impact on households.

"Sheffield is going to have a hard time but not as hard as some other cities. We are less vulnerable than Manchester, Leeds, Bristol and Edinburgh.

"We are going to hurt but others will hurt more. Our economy is in quite a good position to go into the next few years."

Mr Mothersole said the council had to tighten its belt along with other businesses in the city.

"The council's income is down and we have less money. We will probably need to employ less staff and change the shape of our services."

Industries likely to be hit worst are construction, real estate, retail, leisure, hospitality and finance.

But general manufacturing and the public sector are stationary and those involving the environment, creative digital industries and advance manufacturing are actually on the up.

The council is prepared for an increase in homeless families as people are unable to pay rent or have their homes repossessed.

Council leader Paul Scriven said: "The council is responding in a number of ways, including exploring ways of maintaining a supply of affordable housing and ensuring we have systems in place to advise and aid people who fall on hard times."

The Sheffield Telegraph Business Review 2008 is free with next week's Telegraph



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