He spoke before the Designing Demand event in Leeds, at which firms will be told how a design-led approach can help improve competitiveness, profits and the motivation of staff.

Delegates will also hear from some of the 1,300 small and medium-sized enterprises (SMEs) which have benefited from the Design Council's Designing Demand programme, which Yorkshire Forward was the first regional development agency to implement.

Mr Pearson said that Yorkshire's recovery from the troubles of the 1980s left it well-equipped to develop new practices today. "Yorkshire's economy has changed enormously over the last 20 years and emerged with great results.

"Clearly we are going through tough times now as a result of the credit crunch and the surge in food and energy prices. But in tough times the tough get going and Yorkshire has proved that it can develop strong businesses."

Today Mr Pearson will highlight Design Council figures which claim that for every £100 spent on design and creativity turnover will increase by £225. He will draw attention to successful firms, which were helped through Designing Demand.

This will include Halifax-based Heritage Cashmere, a traditional manufacturer which struggled to compete on cost but went on to become a design-led, innovative firm plus Naylor Industries, a fourth generation Barnsley-based clay drain pipe firm which became a major manufacturer of clay and ceramic gardenware.

Designing Demand is part of the Department for Business, Enterprise and Regulatory Reform's manufacturing strategy, an updated version of which was revealed yesterday (see panel below).

He will also say that in South Yorkshire, the average amount spent by SMEs on design products increased from £2,000 in 2005 to £14,000 last year. "It is absolutely essential that firms continue to innovate and invest in research and development."

So far 250 Yorkshire firms have received assistance from Designing Demand with 672 to benefit this autumn. Mr Pearson said that businesses which innovate were likely to see greater profits once Britain has emerged from the current downturn.

The conference, at Leeds' Met Hotel, will include speeches by chair of Toyota Sir Alan Jones and chief executive of Yorkshire Forward Tom Riordan.

For more information, contact the Design Council at www.designcouncil.org.uk