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Funds from the European Union have helped to create jobs in the North East.

With pressure on public spending, there is less money available in the region than there used to be.

But one source of funding looks as if it is still in plentiful supply as it comes from the EU.

The (ERDF) exists to help create jobs in the North East.

The , with £360m available to bidders from the region.

It has two years to run, and there's up to £180m still left in the pot.

But it seems public sector cuts in the UK could actually prevent the North East getting its hands on much of that money.

The EU insists that grants from the fund can only ever fund 50% of a project's costs - forcing the bidder to raise the rest. Without evidence that any project has the other 50% of funding in place, no European grant will be paid.

In the past much of that "match funding" as it's known, has come from the regional development agency , or local councils.

But One North East has had its operations curtailed in preparation for its abolition, and councils are cutting back.

Businesses who want European grants are at risk of being left high and dry.

Hugh Morgan-Williams from the says in past rounds of cuts, banks have stepped in an alternative but this time they are proving reluctant to lend.

And in any case, he says, the businesses that want to access the EU money are sometimes risky propositions which wouldn't attract the banks.

They are often starting out, with unproven business ideas.

One example is in Newcastle. When it first started, the firm struggled to find any financial backers.

UK Haptics used European aid to develop virtual reality systems that can help medical staff practice their techniques.

It was using largely unproven virtual reality technology. The firm was saved though when it secured £50,000 from a fund made up money from the ERDF and One North East.

That helped it develop systems which allow medical staff to practice procedures on virtual patients.

The business has just won a £1m contract with a pharmaceutical company, and plans to double its workforce. But managing director Gary Todd is clear that the business would have failed if it hadn't been for the grant aid.

And since 2007, ERDF money is estimated to have created 2,500 jobs and helped 5,000 businesses.

So could the opportunity to add to those figures be lost?

The North East's Labour MEP thinks so. He believes the Government is pulling the rug on the region.

He says without the European aid the North East could be at a huge disadvantage at a time when every extra job matters.

His Conservative counterpart does admit match funding from public bodies is now in short supply. But he believes good projects will still be able to raise money from the private sector.

And he says there is some doubt about whether the ERDF has offered the North East value for money in the past.

It will also be some time before we know whether the EU aid will end up unspent. There is still more than two years to find new sources of match funding.

But some suspect the Government might not be too heartbroken if the North East failed to spend it.

Although the money would initially go back to Brussels, much of it would then be handed back to the UK as a discount on tis EU budget contribution.

So the North East's loss could yet be the Treasury's gain.

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