More economic gloom as Shell axe 3,000 jobs.

Byline: PAUL EASTHAM

GLOOM over the economy grew yesterday after group Royal Dutch Shell confirmed it is to cut 3,000 jobs across Europe.

The bad news at the oil giant was partly offset by a better outlook in Scotland with the creation of 700 jobs by a Taiwanese high tech company. But 90 people are to be made redundant at Scotland's biggest paper mill.

Management at Caledonian Paper in Ayrshire say the layoffs of more than 20 per cent of the workforce is the only way to safeguard the company.

Shell's slim down comes after the oil giant announced a review of its poor performance last September in the wake of sliding oil prices and the soaring pound.

Yesterday the firm declared a radical restructuring of the Shell Europe Oil Products Division would definitely go ahead.

It was revealed last night that up to 700 UK Shell jobs will be axed as part of the cutback.

Some 290 will go with the closure the Shell Haven refinery on the Thames estuary in Essex.

A further 350 driver jobs will be lost when the company's tanker fleet is put out to tender. Other job losses will take it up to 700, a company spokesman said.

Shell bosses blamed a slide in world oil prices for the job losses.

But that was not the only factor.

The high value of sterling is also partly to blame.

But the grim news at Shell was eased slightly by the expected announcement of a jobs boost for Scotland.

It has been confirmed that up to 700 new jobs are to be created in Silicon Glen through an investment by a Taiwainese electronics firm. The Universal Scientific Industrial Company announced plans for a [pounds sterling]15 million plant in Irvine, Strathclyde, to become its European manufacturing base. The company, which makes electronic and computer components, said the workforce would build up to 700 over two to three years, on a 27-acre site in Irvine.

Bank of England Governor Eddie George was accused yesterday of 'destroying' the British economy with high interest rates during a 'chat' on the Internet.

In an hour-long chat on a Department of Trade and Industry website, Mr George was asked by John Moore in Cater-ham, Surrey: 'When will you work it out that your interest rate policy has destroyed the economy?' Mr George replied: 'The economy has been growing at 3 per cent for the last five years and unemployment is at its lowest for 18 years - that is not a destroyed economy.'