For generations, the Victorian edifice had dominated the city centre. Bold letters declared it to be the home of Newcastle Brown Ale, named after the city in which it was brewed, and now diggers were noisily tearing it apart.

“It’s terrible – this place used to be the heart of the city,” said Tom Sivell, a retired 74-year-old, shaking his head as brewing vats lay crushed under steel girders. “Two weeks ago that was a beautiful building, still standing with those famous blue stars on top of it.”

The falling stars seemed somehow emblematic of the recent fortunes of the North East. There has been the debacle surrounding Northern Rock, the bank that suffered an economy-jarring run only a few weeks ago. And two years before that Scottish & Newcastle’s removal of production of Newcastle Brown Ale across the Tyne to Gateshead. Now there is the takeover battle launched by Carlsberg and Heineken for the brewer. Add the generally fruitless travails of Newcastle United FC, the obsession that seems to transcend all else on Tyneside, and there would seem to be little relief from the gloom that gave rise to gave rise to the gallows humour of The Likely Lads and Auf Wiedersehen, Pet.

Indeed, the hulking structure of St James’ Park, home of the football club, looks over the city just yards from where the old brewery is being reduced to rubble. But St James’ is not the old, rusting arena of yore; it is a huge, modern structure, indeed with plans to get even bigger in future, that Tynesiders would say is a symbol of the future, not the past.

According to James Ramsbotham, chief executive of the North East Chamber of Commerce, Newcastle is a city well used to change. In the city centre it is impossible to stray beyond hearing distance of a pneumatic drill. “The big employers have gone, but they have been replaced by an array of small and medium enterprises and more bespoke companies,” Mr Ramsbotham said.

On the site of the old brewery, a “science city” is planned to showcase universities’ pioneering research in fields such as stem cells.

International competition put paid to Swan Hunter, the famous shipyard, and the mining industry, so Scottish & Newcastle (S&N) and Northern Rock were grasped by the city as counter examples of the trend, proof that Newcastle and the North East was not economically obsolete. Both became part of the city’s cultural DNA.

Since then conference centres and cultural venues, such as the Opera House by the Tyne, have sprung up. Northern Rock, heir to S&N as sponsor of the football club, was instrumental in that change through its policy of investing 5 per cent of pretax profits into good causes in the North East.

S&N’s response to the global pressure to build conglomerates in the brewing industries was one of aggressive acquisitions. Instead, it has been earmarked for much of the past decade as a target itself by bigger fish.

But the prospect of a takeover at S&N was causing some dismay at the Newcastle Labour Club, where Jack Watson sat on the day before his 91st birthday in front of two bottles of Newcy Brown. Jack views the brewery as permanent a fixture as the black and white stripes of United.

“There’s not enough money in the world to buy Newcastle brewery out. It’s part of Newcastle,” he said.

Mr Ramsbotham is more optimistic: “The mood is incredibly upbeat. We had a factory closure announced a while ago in North Shields with 600 job losses. Instantly I had people calling, asking where can I join the queue to employ them.”

At The Strawberry, an S&N pub across the road from St James’ Park, Jim Tonks looks out of the window towards the derelict brewery. “What worries me most,” he says, “is both of them have sponsored Newcastle. Who will dare to sponsor us next?”

Northern Rock rivals plan bid

Bidders for Northern Rock were putting the finishing touches to their financing plans this weekend.

Cerberus, the American private equity group, has been working with GMAC, the funding unit of General Motors, the carmaker, on a rescue plan for the Rock.

JC Flowers has lined up funding worth about £15 billion, but the private equity group is reported to be seeking government guarantees, including on new mortgage business, before pressing ahead.

Sir Richard Branson’s Virgin Group, which last week lined up key management appointments for its bid, is thought to be less popular at the Treasury.

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